Healthcare costs typically rise year over year, however, increases in healthcare costs have skyrocketed in recent years and upcoming increases are expected to be higher than ever before. Employers are seeing sharp increases to their costs for providing healthcare to employees as well. Though slight increases are expected, there are a few main causes in the steep increases expected to see in 2024.
Returning to Normal
As things begin to settle following the COVID-19 pandemic, the regular rate with which people used to act is beginning to return to normal as well. Medical claims are no exception. In fact, employers are already seeing rising rates of medical claims, mirroring pre-pandemic numbers, that will likely result in inflationary cost pressures on behalf of the employer in the new year. As claim rates return to normal, so does the cost on behalf of the employer. Not to mention that high claim employees are another strong driver of rising healthcare costs.
Catching Up
The expected rising rates are coming in response to changes seen during the pandemic such as increasing costs and higher wages that could not be addressed at the time due to the length of existing medical provider contracts. Other contributing factors include new technologies and the innovation of drugs such as weight loss and specialty drugs that cost more to produce and consume.
All of these factors play a role in the expected 8%+ increases in the coming year. If employers choose not to pass part of the increase on to employees or fail to implement other cost saving measures, they are looking at an increase almost double to that of this year.