Revealed: Rise in health care costs for 2024

What's the top reason for rising costs in US?

Revealed: Rise in health care costs for 2024

For the second year in a row, a survey of corporate employers on employee health care costs in the US predicted a median cost increase of 7% for 2024.

Chronic health conditions are the primary cause, at 22%.

The survey, conducted by the International Foundation of Employee Benefit Plans (IFEBP), identified three other main reasons for the increase. At 16%, specialty or costly drug prescriptions and gene therapies were up from last year. Medical provider costs at 14% were also up from last year.

Catastrophic claims (19%) were on par with 2023.

Chronic disease is increasing employee health care costs

“Plan sponsors have indicated that chronic health conditions have a considerable effect on their medical expenses,” said Julie Stich, Vice President of Content at IFEBP. “That ties to the data that disease management and wellness programs rank high in cost management strategies.”

The survey also indicated that the effects of COVID-19 on health care costs continue to recede from last year, as employers reported that only 4% of utilization was due to delayed preventive and elective care during the pandemic, compared to 12% last year.

How HR can manage employee health care costs

“In response to rising specialty prescription drug prices, employers are focusing on utilization strategies like case management to guide medication adherence and management of side effects,” said Stich.

Notably, when asked what strategies would be the most impactful for reducing employee health care costs in 2024, survey respondents had very different answers compared to last year.

At 22%, more said they would use control initiatives to mitigate costs, including case management, prior authorizations, disease management and nurse advice lines. Down from last year at 16% was cost sharing initiatives such as coinsurance, deductibles and copays.

Thirteen percent of respondents said they would employ wellness programs at work, a new standalone option of the survey this year, and plan design initiatives like dependent eligibility audits, high-deductible plans and spousal surcharges/carve-outs remained steady.

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