U.S. employers are preparing for the sharpest increase in healthcare costs in more than two decades, The New York Times reports.
According to a Marsh survey of 1,800 employers, healthcare costs per employee are expected to rise an average of 11% next year, while costs are projected to increase about 8% after employers make changes to their benefit plans. More than one-third of employers expect costs to rise by at least 10% even after making cuts.
Several factors are driving these increases, including higher hospital and prescription drug prices, expensive cancer medications and growing demand for GLP-1 drugs used to treat diabetes and obesity. Employers are also facing higher payments to some out-of-network providers and increased costs associated with healthcare practices involving artificial intelligence.
These rising expenses are placing greater financial pressure on workers, who are paying more through premiums, deductibles and co-pays. In response, employers are exploring significant changes to their health plans. Some are reducing drug coverage, limiting coverage for spouses with other insurance options, narrowing provider networks or negotiating directly with hospitals and doctors. Others are seeking greater transparency from insurers and pharmacy benefit managers or switching to smaller companies that promise clearer pricing. Smaller employers may be experiencing the greatest pressure.
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