Employer Cost of Health Care Utilization - Mitigate Rising… | MOBE

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How Can Employers Mitigate Rising Health Care Utilization Costs?

Recent research indicates health care utilization costs are rising for employers—quickly—and by a substantial amount. Some health care prognosticators are predicting an annual rate of increase in utilization costs to nearly double in 2024, from 4.5% to 8.5%.

Aon, the International Foundation of Employee Benefits Plans (IFEBP), Mercer, and others are forecasting health care costs to climb faster than they have in a decade. In fact, next year, employers could be paying more than $15,000 per employee for their health care.

And that’s not something that can be easily passed along to employees, not if employers want to attract and retain top talent in this tight labor market.

The reasons for the rise.

It’s easy to point the finger at the issue that has plagued us for several years now: inflation. According to Debbie Ashford, the North America chief actuary for health solutions at Aon, given the multiyear provider/health plan contract cycle, these inflationary pressures have lagged, but will be coming to fruition soon.

Other factors are contributing to rising costs as well. IFEBP’s research names chronic health conditions, catastrophic claims, costly prescription drugs/gene therapy, and medical provider costs as the top four reasons for the increase. In the prescription drug category, Aon anticipates one percentage point of their projected 8.5% increase in employer health care costs to come from obesity-treating (GLP-1) medications alone.

Risk-free, guaranteed health care cost savings.


Reducing health care costs is multifaceted.

Depending on who you ask in the industry, cost savings can come in many forms. IFEBP’s research lists the top three initiatives with the most anticipated impact for 2024. These include utilization control initiatives such as case management, disease management, and nurse advice lines; cost sharing actions like deductibles and copays; and wellness programs, among others. According to Mercer’s Health & Benefit Strategies 2024 Survey Report, 64% of employers surveyed say they are planning to make enhancements to their health and well-being offerings.

In addition to cost-cutting initiatives and enhanced well-being offerings, getting accurate insight into claims data is a critical first step in assessing risk and cutting costs. Willis Towers Watson’s Alan Silver, ASA, MAAA, FCA, says in his article, Volatility in a high-healthcare trend environment: The return of risk management that it’s important to “identify what disease states are prevalent and indicated within your population data. Whether it is cancer, diabetes, obesity ... fertility or mental health, you need to know what conditions could lead to claims that will have a significant impact on your specific trend.”

Too many solutions may be a problem.

It’s a fact that identifying conditions is critical to understanding where costs, and financial risk, exist. But should employers use multiple solutions to address each condition and health risk factor individually? These costs can really add up. Plus, proving ROI on each health and well-being solution isn’t easy.

Is there a way to drive improved health outcomes through a whole-person approach, and link them directly to measurable—and proven—financial outcomes?

The important answer to this final question is yes.

On average, MOBE saves clients 7.5% of claims costs for a select population. This can equate to millions (and millions) of dollars saved.

How much could your organization save? Get a free cost savings projection

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