The cost of job-based health care coverage for 2024 is expected to rise at its fastest pace in years as inflation pervades insurance policies. Companies plan to shoulder most of the increase, but many workers could also feel the pinch in the form of higher premiums and out-of-pocket costs for care, benefits consultants say. Some companies may also limit the coverage in various ways to blunt the jump in cost. Workers will learn just how much more they’ll pay during their employers’ open enrollment period, which typically takes place at this time. This year, employees are shelling out an average of $6,575 for their share of the nearly $24,000 annual premium for a family policy and just over $1,400 for their share of the $8,435 annual cost of single coverage, according to KFF, formerly the Kaiser Family Foundation. Nearly 153 million Americans have job-based health insurance, the largest source of coverage by far, according to KFF. There are multiple reasons why health care costs are rising swiftly now, said Debbie Ashford, the North America chief actuary for Health Solutions at Aon, which pegs the increase at 8.5% for 2024, nearly double the rate for this year. Higher prices account for more than half of the jump. Though inflation hit its peak last year, the impact is often delayed in the health care sector because contracts between insurers and medical providers are usually locked in for several years. “Even though inflation is subsiding, the health care trend is growing as medical providers push insurers for larger cost increases to cover the higher costs of wages and supplies that they endured during the last couple of years but were unable to pass on to payers,” she said. Also, Americans are once again going back to the doctor and accessing medical care, after several years of muted utilization earlier in the Covid-19 pandemic, she said. At the same time, more workers and their families are contending with chronic and more expensive conditions, exacerbated by the delays in care. Plus, there has been a significant uptick in the use of specialty drugs, particularly those for diabetes and weight loss. The average monthly cost per member for this class of drugs roughly doubled between 2022 and this year, adding around 1 percentage point to next year’s hike, Ashford said. Just how much more workers will have to pay next year isn’t known yet. But this year, when employer costs increased an average of 4.5% compared to 2022, employee premiums rose an average of 1.7%, according to Aon, which looked at data from 800 US employers representing about 5.6 million employees. But workers’ out-of-pocket costs — including deductibles, copays and co-insurance — jumped 5.7%, for an overall increase of 3.3%. Changes to employee benefits Employers are taking a variety of steps to try to control costs, said Courtney Stubblefield, managing director of health and benefits at WTW, formerly Willis Towers Watson, which projects employer costs will go up 6.4% for 2024, compared to 6% for this year. More companies are seeking bids on their health insurance programs from multiple carriers, rather than automatically renewing their contract with their existing insurer, to try to find better deals and lower prices. “We will have more changes this year than in previous years because employees are rethinking and reevaluating their plans,” she said. “All of this is to find the lowest cost for everybody involved and to find the best programs.” Nearly one-quarter of employers are planning to or considering offering a narrow network of providers in the next two years, according to a WTW survey of 457 employers who have a total of 7.3 million workers. Almost one in five are planning to or considering implementing a centers of excellence program for certain conditions, such as some orthopedic, cardiac or cancer diagnoses, where employees can get care from high-quality providers at little or no cost. And 13% are looking at offering policies that restrict or eliminate out-of-network coverage for non-emergency care. Improving mental health care benefits is also a top priority for many employers, said Jim Winkler, chief strategy officer at Business Group on Health, which represents large, multistate companies. They are particularly concerned with access to and quality of providers, along with burnout among their staff. Nearly two-thirds of employers plan to work with their health plans and outside vendors to expand mental health networks for 2024, up from less than half this year and last year, according to the industry group’s latest survey of 152 companies representing 19 million people. In addition to treatment from psychiatrists and psychologists, companies are offering visits with counselors and life coaches to provide more capacity. Some 44% of employers plan to offer mental health navigation programs to guide their workers who need care through the process. That’s up from less than one-third this year. “Employers are recognizing that demand for mental health increased during the pandemic and has stayed at an elevated level since,” he said. Enticing workers to use their benefits Rising costs and the desire to provide more comprehensive benefits is leading Technology Container Corp. to overhaul its employee health insurance program for 2024, said Melissa Wayne, chief financial officer. The company, which makes plastic reusable boxes, also wants to make its benefits easier to use. It currently has a $6,000 deductible for single coverage but reimburses employees for up to $5,750 in medical bills. However, it wants to move away from this practice because it involves a lot of time and paperwork, which causes major headaches. So the Desoto, Texas, firm is considering joining a professional employer organization to handle its all its benefits, including health, vision, dental, life insurance and disability coverage. This will reduce the premiums it pays and the number of administrators it has to deal with. Plus, the 35-employee firm may shift to a fully insured plan, where the employer pays a set amount to an insurer that covers the claims. Currently, the company is self-insured, so it is responsible for footing the bill for its workers’ medical care. These changes may result in workers’ weekly premiums rising by up to $9 next year, but their out-of-pocket costs for care will decrease, Wayne said. Also, the plan will be simpler to use, offer more benefits and cover more procedures. “We’re trying to cut costs,” said Wayne, noting that the company recently bought new equipment that it’s hoping to fully pay off next year. “But we’re also trying to do what’s best for the employee at the same time. We do have an aging workforce, and we want people to use the benefits as much as possible.” At Whirley DrinkWorks!, premiums are going up 3% for both the company and employees next year, which is the largest increase since 2018, said Cleo Nixon, human resources director at the promotional drinkware manufacturer in Warren, Pennsylvania. More employees this year needed care, including some elective surgeries that had been delayed because of the pandemic. And some are on pricey medications, including those for weight loss and diabetes. All that drove up costs. But the company is focused on keeping costs low for their nearly 400 employees so they’ll actually use the care when they need it. It is keeping its annual deductible at a low $300, and it offers hefty discounts on premiums if workers partake in wellness programs that can reduce the monthly charge to as little as about $40 for single coverage and $177 for family policies. “We don’t want people to have an excuse not to go to the doctor,” Nixon said, adding that it’s cheaper to pay for multiple doctor visits than one complicated hospital stay. Also, if workers stay healthy, they lose less time at work. “It pays you back in many different ways,” Nixon said.
