Employee Benefits Market Check Survey: 2024 Medical Cost Increase

As employers wrap up their health plan renewals for 2024, they grapple with a complex landscape influenced by inflation, the soaring costs of prescription drugs, high-cost claimants, and many other economic and market factors. The persistent challenge of inflation has significantly heightened operational costs across industries, impacting employers’ ability to maintain affordable health plans for their workforce. The escalating prices of prescription drugs have further exacerbated this issue, necessitating a thoughtful review of benefit offerings, PBM relationships, and cost-sharing arrangements. The need for strategic decision-making to navigate these challenges underscores the importance of a comprehensive approach to health plan renewals in 2024.

We conducted a poll On December 14 to determine the final cost impacts for employers. The results are in the charts below.

2024 Final Medical Cost Increase

(after all plan design, carrier and network changes)

Changes Implemented to Reduce 2024 Medical Renewal Increase

Results based on 270 employer respondents

Key Findings

Inflation increases are one of the reasons for higher costs in 2024, but other factors are playing a role:

• Increase in pharmacy prices and utilization
• New gene therapies coming to market
• Rising provider unit cost/new provider contracts
• Additional costs due to long-term COVID-19

We anticipate these headwinds will also impact renewals in 2025.

With two-thirds of all respondents absorbing an increase of at least 4%, it is clear that cost pressures are once again at the forefront of employers’ minds. While employers strive to bear the brunt of these increases, as noted above, employees feel the financial impact as well, with increased contributions being the most common medical plan change implemented. Consequently, affordability will remain a challenge for employees and employers alike.

We anticipate plan sponsors to focus on pharmacy utilization, total cost of medical care, physical and mental well-being, and care navigation to manage rising costs.

Should you have any questions regarding any of this information, want to explore solutions for your company, or want access to industry-specific data, please contact your local Assurex Global adviser.