Health Benefits Costs to Increase 5.2% in 2024

Employers expect a sharp increase of 5.2% in the average per-employee cost of employer-sponsored health insurance in 2024, according to a recent report.

That’s consistent with the 5.2% increase recorded this year, reports Mercer.
Aon recently predicted an increase of 5% in spending for this benefit for next year.

In 2022, costs rose by 3.2%, well below general inflation, which averaged 8% that year, according to Mercer. Because healthcare providers typically have multi-year contracts with health plans, employers did not feel the full brunt of inflation last year, it notes.

“Rather, inflation-driven cost increases are phasing in as contracts are renewed,” says Sunit Patel, chief health actuary, Mercer. “It may take another couple of years for price increases stemming from higher healthcare sector wages and medical supply costs to be felt across all health plans.”

But inflation is only one factor behind this year’s higher cost increases. In 2023, spending on prescription drugs rose sharply.

“While the effects of inflation may be relatively short-lived, new and ongoing developments in the pharmaceutical market seem likely to have a longer-term impact on health benefit cost,” says Patel.

Over three-quarters (77%) of employers plan to increase their investment in virtual care over the next three years, according to a previous report.