Health care cost increases are not slowing down—here’s why

May 14, 2017

Everyone knows that health care costs are rising for both employers and employees. Research shows this trend will not slow down anytime soon.

  • In 2017, employees are paying an average of 6% more for their health care premiums.1
  • In 2017, salaries are expected to increase only 3% on average.2
  • Over the past 10 years, employees have carried the weight of significant health care cost increases. Their costs have increased 135% since 2005, while employer costs have increased 62% since 2005.3

Employees have carried the weight of significant cost increases - soaring 135% since 2005.

Source: Aon Health Value Initiative


 

 

What is causing these increases? And what can you do about it?

First, it's important to understand what is driving these rising costs. The top three cost drivers are:4

Specialty pharmacy benefits

Prescription drug costs are expected to increase 7.3% overall in 2017. But most of this increase is due to specialty drug costs, such as biologics that require special handling. Specialty pharmacy costs are projected to surge 16.8% in 2017.

High-cost claimants

5% of your population are responsible for upwards of 50% of your health care costs! These are considered super-utilizers of health care benefits and are dealing with chronic conditions and other major medical issues.5

Specific high-cost diseases and conditions

Obesity accounts for 21% of U.S. national health care spending, and these employees have an 80% greater likelihood of absences.5

 

More often than not, you’ve asked your people to share in those rising costs through premium increases and cost sharing (deductibles, copays, coinsurance). And you may feel you’ve already shifted as much cost as you can and believe any more would make health insurance unobtainable. Continuing this approach of shifting costs to employees is not likely to drive the desired long-term results, but it's challenging to know how to best approach your benefits administration decisions.

 

Ready to better understand how to address the rising costs of health care? Download the complete ebook on reimagining your approach to health benefits delivery:

Get the ebook

 

 
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