Rising medical costs remain a top concern for businesses in the U.S. as employer-sponsored plans continue to outpace inflation. A recent WTW Global Medical Trends Survey revealed that the cost of medical care in the U.S. will increase by 8.9% in 2024, compared to an 8.2% increase in 2023.
In response to rising healthcare costs and increasing demand for help with workforce education and communication, efficiency improvements, and balancing sought-after benefits with budgetary constraints, many benefits brokers are stepping up.
Find out why medical costs are growing and how a benefits broker can help you lower your expenses.
Comprehending the Drivers of Medical Cost Inflation
Businesses nationwide feel the squeeze due to medical cost inflation, but what is driving this increase? Some elements that are significantly influencing the affordability and accessibility of healthcare include:
High-Cost Claims
High-cost medical claims are straining insurance premiums, out-of-pocket expenses for individuals, and the healthcare system as a whole. These types of claims can arise for many reasons, such as an increase in chronic health conditions, the use of advanced technologies, and the need for complex treatments such as cancer and intensive newborn care.
What were once considered larger-than-normal claims are now becoming more common. In 2022, BCS Financial’s Large Claims Solutions paid out six claims exceeding $2 million which only adds to the already exorbitant healthcare costs.
Lifestyle Factors
Certain lifestyle factors can also influence patient health and, in turn, cause medical costs to skyrocket. There is a direct relationship between health and lifestyle. Several elements make up this relationship, such as diet and nutrition, physical activity, mental health, and substance use (smoking and alcohol).
The obesity epidemic in America is also driving up healthcare expenses. The latest data reveals that 39.6% of U.S. adults are obese, while an additional 31.6% are overweight.
The aging population is also contributing to rising medical costs. Among this group are an increased prevalence of chronic conditions, higher utilization of healthcare services, increased prescription drug use, and the need for long-term care.
The Role of Benefits Brokers
Benefits brokers play an essential role in helping companies manage medical costs by acting as intermediaries between businesses and insurance providers. Some services that brokers offer include:
Educating Clients
Brokers are professionals in their field and can provide clients with detailed information about various aspects of health insurance and employee benefits. They can also provide employers, HR, and CFOs with clear explanations for cost increases and offer strategies for reducing overall medical costs.
Strategic Planning
Through strategic planning services, benefits brokers can assist companies in planning and budgeting for health benefits. A broker can help you design a benefits plan that manages and mitigates medical costs and recommend cost-sharing strategies to balance cost with coverage, such as high-deductible health plans (HDHPs).
Market Insights
Benefits brokers offer valuable market insights to help businesses make informed decisions about their benefits programs. These professionals often leverage industry reports and data from firms to understand current trends better and prepare for negotiations.
How Benefits Brokers Can Add Value
Businesses are always looking for new ways to manage and reduce their medical costs. Benefits brokers can assist with this process by offering expertise and effective solutions, such as:
Cost Management Strategies
A broker can help your business implement cost management strategies designed to control and reduce medical costs. Examples include health savings accounts (HSAs), disease management programs, and preventive care initiatives that address health issues before they become more severe.
Customized Health Plans
With the help of an experienced benefits broker, you can personalize your company’s health plans to fit your organization’s specific needs and demographics. Customized, flexible health plans include adjustable coverage levels, out-of-pocket limits, and co-pays to create a balance that meets the needs of employees while saving money.
Negotiating With Providers
Benefits brokers possess valuable mediation skills that allow them to negotiate better rates with healthcare providers and insurance companies efficiently.
Brokers may also recommend using alternative provider networks that could potentially lower costs while maintaining high-quality care. They help businesses understand the potential implications of switching networks while ensuring the new network meets their needs.
How New City Can Assist Your Business With Lowering Medical Costs
Rising medical costs present an ongoing challenge for businesses, influencing the well-being of their employees and impacting their bottom line. While understanding the root causes of rising medical costs is important, consulting with a professional is best to learn how to address these financial pressures.
New City Insurance employs data-backed strategies to help companies access lower-cost health plans and maximize their savings. Contact New City at 888.210.2765 to learn what we can do for your business.