US health care costs are likely to experience the biggest increase in ten years! The employer may have to pay for this

Zhitong Finance ·  09/21 14:45

The Zhitong Finance App learned that according to the predictions of healthcare consulting firms, US employers may face the biggest increase in health insurance costs in ten years next year, but with the labor market tight, workers may be spared this time around.

Benefit advisors at Mercer (Mercer), AON.US (AON.US), and Willis Towers Watson (WTW.US) expect healthcare costs for employers to rise 5.4% to 8.5% in 2024 due to medical inflation, soaring demand for expensive diet pills, and the spread of high-priced gene therapies.

A survey conducted by Mercer, a subsidiary of Vistason (MMC.US), found that more than two-thirds of employers either did not plan to pass on any cost increases to employees, or to pass on lower than anticipated cost increases in 2024.

“They don't want to put more financial pressure on employees who are also dealing with inflation, especially when they really need to rely on health benefits to retain employees,” said Beth Umland, head of health and welfare research at Mercer.

In the 12 months up to August, US consumer prices rose by 3.7%. Although lower than the peak of 9.1% in June last year, surgery price contracts between insurance companies and hospitals were signed months or even a year in advance, so the rise in medical costs usually lags behind overall inflation.

Benefits advisors help design insurance plans for medium to large employers. Roughly two-thirds of American workers receive benefits through such programs. Insurance companies that administer employer insurance plans, United Health (UNH.US), Cigna (CNC.US), CIA (CI.US), and Elevance Health (ELV.US) declined to comment.

Aon Insurance expects employers' medical expenses to increase by 8.5% next year, of which diet pills alone will increase by 1%.

According to reports, due to consumer demand for diet pills, sales of similar diabetic drugs such as Wegovy, which has been approved by NVO.US (NVO.US), and similar diabetic drugs such as Novo Nordisk's Ozenpic and LLY.US (LLY.US) Mounjaro, which are “off-label (off-label)” for weight loss, experienced a surge in sales last year.

Also, in the past year, about six gene therapies have been approved in the US, most of which cost more than $1 million. Advisors say gene therapy for just one employee could significantly raise the company's costs.

All advisers said employers will increasingly use artificial intelligence to help cut administrative expenses as they look for ways to mitigate rising costs, adding that scrutiny of the coverage of expensive treatments will be strengthened.

Companies and insurers are also looking for cheaper hospital networks for certain procedures.

Janet Faircloth, senior vice president of Aon Insurance's Health Innovation Team, said, “The motivation employees get (from the corporate side) is that if you come here, you'll have to pay less.”

The translation is provided by third-party software.

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