Employers' health benefits costs are set to rise 5.4% next year, but this spike isn't as high as may have been feared given inflationary pressures in the broader economy, according to a new analysis from Mercer.
Over the past decade, the firm's annual survey of employer-sponsored health plans projected cost increases of between 3% and 4%, according to the analysis. But high inflation as well as labor pressures across the healthcare industry have driven up costs, which in turn increases benefit expenses.
Beth Umland, director of research for health and benefits at Mercer, told Fierce Healthcare that given the complex economic environment, "a sharper spike" in costs was possible. But that didn't pan out, at least for 2024.
"We really just didn't quite know what to expect," she said. "I think we're definitely seeing the impact, but we're grateful it's not worse."
The survey polled 1,700 employers, and further analysis of their insights will be released later this year.
In addition to inflation, the study points to provider consolidation and the growing number of ultra-pricey drugs as key factors pushing up costs overall. The surveyed employers also noted the rising demand for GLP-1s as a particular concern.
Umland said those surveyed are looking at the GLP-1 issue from two angles. For one, they're weighing whether their coverage for weight loss and obesity care is good enough, which could provide patients with access to alternatives that are less costly.
Further, they're looking at putting systems in place, such as prior authorization, that can better manage the cost around these drugs specifically, she said.
"The cost concerns are definitely there, because it's a big spike in utilization," she said. "And these are expensive drugs."
The survey did identify some bright spots. Rather than continuing to mitigate costs by shifting them to workers, employers have taken steps to identify alternatives, such as narrow networks and centers of excellence aimed at boosting access to more high-quality care.
Earlier this year, a Mercer analysis found that 28% of employers were offering navigation or advocacy services to members, which can help them identify providers driving better outcomes.
Umland said there isn't any evidence, at least for 2024, of employers changing course on cost-shifting.
About half (49%) of those surveyed said they plan to offer at least one point solution that aims to address a particular chronic condition, such as diabetes. A similar number (42%) said they have made significant progress in improving access to behavioral health care over the last three years.
"It's better outcomes, which is what an employer wants," Umland said. "They want their employees healthy, and back at work."