Employers brace for 7% increase in healthcare expenses in 2024

Chronic health conditions have "a considerable effect" on medical expenses, says plan sponsors

Employers brace for 7% increase in healthcare expenses in 2024

In a recent survey, employers revealed their expectations of facing another substantial hike in healthcare costs for the upcoming year.

“Employers are anticipating another 7% increase in healthcare costs for 2024. 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,” said Julie Stich, vice president of content at the International Foundation of Employee Benefit Plans.

The foundation's survey findings indicate a consistent pattern with this year's cost increases.

According to survey respondents, the top contributors to the expected cost increase are utilization due to chronic health conditions (22%), catastrophic claims (19%), specialty or costly prescription drugs, including cell and gene therapy (16%), and medical provider costs (14%).

The survey found that there was a significant shift from the previous year, with increased utilization due to delayed preventive or elective care during the pandemic, declining from 12% to 4%.

“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 Stitch.

When asked about the initiatives that would have the most impact on cost management in 2024, there were differences from last year's survey data.

Employers are preparing to implement a range of strategies to control expenses in the upcoming year.

These strategies include:

  • Utilization control initiatives such as prior authorization, case management, disease management, and nurse advice lines (22%)
  • Cost-sharing initiatives such as deductibles, coinsurance, copays, and premium contributions (16%)
  • Emphasis on work and wellness programs (13%)
  • Plan design initiatives such as dependent eligibility audits, high-deductible health plans, spousal surcharges, carve-outs, and formulary changes (12%)
  • Purchasing and provider initiatives such as telemedicine, price transparency tools, centers of excellence, healthcare navigators and advocates, coalitions, and quality initiatives (12%)