December 12, 2023

Health care costs will continue to increase in 2024. Global professional services firm Aon reported that health care costs for employers will rise above $15,000 per employee next year. This is nearly double the change employees faced in 2023. What is driving the increase? Let’s take a look at 3 primary health care cost trends and how employers are trying to fight back.

Mental Health Challenges

The COVID-19 pandemic saw a rise in employees’ mental health needs. Depression, anxiety, substance abuse and more continue to linger as the height of the pandemic fades from view.

The Business Group on Health’s annual survey revealed that:

  • Three-quarters of employers (77%) reported an increase in mental health concerns following the pandemic, compared to 44% in 2022.
  • Nearly one-fifth of employers (16%) anticipate an increase in mental health concerns in the future.

These challenges will continue to create prolonged impact for employees and employers alike. Many organizations will continue to expand benefits that create access to mental health services in 2024.

Organizations are also considering manager and employee training to combat stigma and create environments. Additionally, they are turning to benefit plans that are more conducive to supporting employee’s mental health needs.

Pharmacy Costs

In 2024, pharmacy costs will continue to impact employers significantly. High-cost drugs like Humira and Ozempic are on many employers’ radars. Furthermore, relationships with pharmacy benefits managers (PBMs) are also a key concern for employers. Business Group on Health’s survey data provides additional context:

  • Employers experienced an increase in the median percentage of health care dollars spent on pharmacy, from 21% in 2021 to 24% in 2022.
  • Most (92%) employers were concerned or very concerned about high-cost drugs in the pipeline.  Another 91% were concerned or very concerned about the pharmacy cost trend overall.
  • Nearly three-quarters (73%) of employers say finding more transparency in PBM pricing and contracting is a priority. Also, 58% say they want to see additional reporting and better provider quality measurement standings.

To address rising drug costs, employers may implement pharmacy management strategies. These could include prioritizing transparent PBM practices and plan design changes to address costly medications and treatments.

In an intentionally complex industry, many organizations are turning to experienced pharmacy benefits advisors to help them navigate contracts and control costs.

Cancer Treatment

The effects of the pandemic continue to impact cancer care. Preventive screenings were a critical health care component disrupted during this time, resulting in more late-stage cancers among workers. The cost of oncological care is significant.

Consider the following survey results from the Business Group on Health:

  • Fifty percent of employers report cancer is the number one driver of health care costs, and 86% say it is a top three drivers.
  • Half of employers (53%) will offer a cancer-focused center of excellence approach in 2024, with an additional 23% considering this strategy by 2026.

In response to rising cancer care, employees may encourage advanced screening measures and maintain full coverage of recommended prevention and screening services. Some employers rely on their broker’s clinical team to conduct medical claims surveillance and contain the risk and cost of cancer treatment.

Outlook

As we approach 2024, many employers are focusing on impacts related to mental health, medications and cancer care. The increasing cost of health care is stretching the wallets of employers and employees alike. Employers should consider working with a partner who can help them deploy strategic benefit enhancements, navigate the complexities of the pharmacy industry and contain health care risk. Want to learn more? We would love to connect.

 

Some content courtesy of our partners at Zywave.