State of the Insurance Market

2024 Initial Outlook:
Employee Benefits

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Market Updates

The employee benefits landscape continues to evolve alongside macroeconomic forces and changes within the healthcare industry:

  • Shifting workforce and hiring dynamics: With the slowing economy, employees have less ability to dictate terms as they had during the height of the talent shortage. However, Risk Strategies has yet to see this impact employee benefits, overall compensation, and total rewards packages on a broad scale.
  • Focus on equity: Employers are starting to think more holistically about their benefits programs, shifting benefits to better serve a diverse workforce. Expanded programs work to meet the needs of all employees regardless of age, gender, race, ethnicity, and more.
  • Investments in employee experience: To add value to existing benefits, large group employers are seeking improved clinical and administrative experiences that focus on a member-centric service model. This experience brings member advocacy, care navigation, and concierge services together for an enhanced and easier member healthcare journey. Risk Strategies expects these improvements to trickle down to small and midsized groups soon.
  • Workforce turnover impact on return on investment (ROI): It can take over three years to see a mature ROI on robust medical benefit plans when many payors (and large self-funded employers) are focused on first-year savings. They are now beginning to look at these programs from a long-term perspective, recognizing that savings with higher turnover employee populations may not be seen.
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  • Evolution of digital solutions: As digital health services continue to innovate and evolve, newer solutions have come to market that include health support or monitoring through digital devices (e.g., Bluetooth®-enabled devices). These devices help individuals better manage and track their health, as well as provide treating physicians with tracked datapoints resulting in fewer in-person appointments. However, it is too early to see if this evolution has any clear influence on potential plan savings or overall cost trends.
  • Pharmacy innovation trends: GLP-1 prescription drugs have made headlines in recent months. While they were created to manage diabetes, they are also often prescribed to address weight loss. Large employers and health plans are typically covering the GLP-1 drug cost for weight loss if it is part of a broader lifestyle management program.

2025 State of the Insurance Market: Initial Outlook and 2024 Wrap-Up

Coverage Considerations

In the next six months, a number of forces will raise costs across the board, creating challenges for employers including:

  1. Increased medical utilization: Elective surgeries and emergency department visits are back to pre-pandemic levels. Risk Strategies predicts these will continue to increase.
  2. Inflationary pressure: Medical care costs follow inflation’s lead and typically lag six to 12 months behind the Consumer Price Index.
  3. Changes in admitting and billing patterns: Due to the consolidation of health systems and the ongoing acquisition of providers, there is an increase in instances where service delivery models have changed. For example, services previously provided in a physician’s office are now provided, or billed, on an outpatient basis, or services previously provided on an outpatient basis are now provided, or billed, on an inpatient basis. Changes like these can lead to increased costs as consolidation affects this and other aspects of billing patterns.
Rate Forecast
Medical: +9% to +12.5%*
Prescription Drugs, Retail: UpArrow-01 +8% to +9.5%
Prescription Drugs, Specialty: UpArrow-01 +12.5% to +14%
Stop-loss Premium, Leveraged Trend: UpArrow-01 +16% to +19%

*Trend will vary regionally based on the healthcare delivery system

Recommendations

  • Determine which levers you may want to engage to help mitigate rising costs — coverage levels, unit cost, or utilization/behavioral change.
  • Provide programs that enable your employees to manage chronic conditions (e.g., diabetes, heart health, weight) to help lessen the potential for more serious health outcomes.
  • Construct a benefits ecosystem (i.e., an integrated vendor/program/solution mix that is cohesive for employees) in order to deliver the ROI your organization needs.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.