Healthcare premiums are set to spike as Americans get squeezed by medical costs
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Health’s at a premium… That cost-of-living pay raise may be even less exciting next year. Health-industry forecasts say that employers’ healthcare costs will jump by 9% next year — up from this year’s 6% hike (which was already above the five-year average). That would push the cost per employee to more than $16K, which could see a larger chunk taken out of paychecks.
Blockbusters: More than half of employers say GLP-1s (think: Novo Nordisk’s Ozempic and Wegovy) are driving up their costs. Drug costs rose to 27% of companies’ health bills, up from 21% two years ago.
In the middle: Last month the FTC dropped a scathing report saying that the biggest pharmacy benefit managers from companies like UnitedHealth and CVS could be inflating drug costs. Meanwhile, 37% of companies say they plan to find a new PBM next year.
Flashing the card: Major insurers have reported spiking medical costs as patients return to hospitals and doctors’ offices. UnitedHealth said its costs rose 9% last quarter. Aetna parent CVS this month said its medical costs could continue to climb this year.
The affordability crunch… Healthcare’s bite out of Americans’ budgets is getting bigger. Over the past decade, the cost of prescription drugs has risen 37% in the US, where medical debt is the leading driver of bankruptcy. Americans spend more on healthcare than people in any other major country, and about half said they’ve struggled to cover medical costs recently.
Climbing costs tend to trickle down… While employers have swallowed the bulk of swelling healthcare costs in recent years, more could be passed on to workers in a weaker labor market. The chunk of the premium footed by employees rose more than 3% this year to nearly $5K/worker (more than the five-year average annual hike of about 1%). Nearly half of employers said they’re likely to shift rising costs onto their workers next year.