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Aon Report: Big Increase Projected for 2024 Employer Health Costs
Summary
A new analysis from Aon, a global professional services firm, predicts that employer-sponsored health care costs could increase 8.5 percent to more than $15,000 per employee in 2024. This is due to inflation, rising prescription drug costs, catastrophic health claims, more chronic health conditions and the share of specialty drugs. Employers are reluctant to pass on the increases to employees, given retention concerns, and are likely absorbing more of the cost to keep employees' paychecks unchanged. Strategies such as utilizing control initiatives, adding wellness initiatives, and changing plan design are recommended to hold down costs.
Q&As
What is the projected increase in health care costs for US employers in 2024?
The projected increase in health care costs for US employers in 2024 is 8.5 percent.
What factors are contributing to higher health costs in 2024?
Factors contributing to higher health costs in 2024 include rising prescription drug costs, catastrophic health claims, general inflation, more chronic health conditions, newly indicated weight loss drugs, new technologies, and the increasing share of specialty drugs.
What strategies can employers employ to hold down costs for organizations?
Strategies employers can employ to hold down costs for organizations include utilizing control initiatives, adding employee wellness initiatives, and changing plan design initiatives.
What percentage of the health care plan cost is subsidized by employers?
On average, employers subsidize about 81 percent of the health care plan cost.
How are employers responding to higher health costs in terms of passing them on to employees?
Employers are hesitant to pass higher costs on to employees and are absorbing most health care cost increases due to retention concerns.
AI Comments
👍 This article provides a comprehensive overview of the projected employer health costs for 2024 and offers insight on strategies to help employers contain costs.
👎 The projected 8.5 percent increase in employer health costs for 2024 will have a significant financial burden on organizations.
AI Discussion
Me: It's about the projected increase in employer health care costs in 2024. Aon, a global professional services firm, estimates that the budgeted health care plan cost for employers will increase 8.5 percent to more than $15,000 per employee in 2024.
Friend: Wow, that's a sizeable increase. What do you think the implications of this might be?
Me: It's likely that employers won't want to pass on the costs to their employees since the labor market is already so tight. Employers may absorb more of the costs to keep employee paychecks unchanged. Employers could also use cost-saving strategies like wellness initiatives and changing plan design initiatives to reduce costs. Additionally, employers may increase their focus on retaining employees, as higher costs can make them less competitive in the labor market.
Action items
- Research cost-saving strategies to help reduce health care costs for employees.
- Develop employee wellness initiatives to help promote healthier lifestyles.
- Consider plan design initiatives such as high-deductible health plans or spousal surcharges to help manage costs.
Technical terms
- Aon
- Aon is a global professional services firm that provides risk, retirement, and health solutions.
- Multiyear
- A period of time that is longer than one year.
- Inflation
- A sustained increase in the general level of prices for goods and services.
- Catastrophic Claims
- A health insurance claim that is very large and expensive.
- Prior Authorization
- A process in which a health care provider must obtain approval from an insurance company before providing a service to a patient.
- Disease Management
- A system of coordinated health care interventions and communications for populations with conditions in which patient self-care efforts are significant.
- Wellness Initiatives
- Programs designed to promote health and prevent disease.
- Plan Design
- The process of creating a health care plan that meets the needs of an organization and its employees.
- Spousal Surcharge
- An additional fee charged to an employee who is married and has a spouse who is eligible for health insurance coverage.
- Carve-outs
- A type of health insurance plan that excludes certain services from coverage.