U.S. corporate employers project a median health care cost increase of 7% for 2024, according to International Foundation of Employee Benefit Plans survey results. The 7% increase is on pace with cost trends projected last year in a similar survey conducted by the International Foundation.
Causes of Cost Increases
Plan sponsors shared their thoughts on the primary reasons contributing to a rise in medical plan costs for 2024. The top four responses are:
- 22%—Utilization due to chronic health conditions (up from last year)
- 19%—Catastrophic claims (same percentage as last year)
- 16%—Specialty/costly prescription drugs/cell and gene therapy (new in the top four this year)
- 14%—Medical provider costs (up from last year).
The effects of the pandemic appear to be waning as only 4% of responding employers indicated that the primary reason for cost increases is utilization due to delayed preventive/elective care during the pandemic (down from 12% last year).
When discussing the results with Julie Stich, VP of Content at the International Foundation, she said that Plan sponsors have indicated that chronic health conditions have a considerable effect on their medical expenses. That ties to the data that disease management and wellness programs rank high in cost management strategies.
Managing Costs
When asked what types of initiatives would make the most impact on managing costs for 2024, there were notable differences from survey data collected last year. Employers indicated the following strategies to manage expenses in the coming plan year:
- 22%—Utilization control initiatives: e.g., prior authorization, case management, disease management, nurse advice lines (increase from last year)
- 16%—Cost sharing initiatives: e.g., deductibles, coinsurance, copays, premium contributions (down from last year)
- 13%—Work and wellness programs (new standalone response option this year)
- 12%—Plan design initiatives: e.g., dependent eligibility audits, high-deductible health plans, spousal surcharges/carve-outs, formulary changes (same percentage as last year)
- 12%—Purchasing/provider initiatives: e.g., telemedicine, price transparency tools, centers of excellence, health care navigators/advocates, coalitions, quality initiatives (down from last year).
Stich also noted that 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.
Visit www.ifebp.org/healthcarecosts2024 for more information and a copy of the full survey results.
