Labor costs, drugs and inflation push health care costs up; painful pricetag will be felt by employers and workers

Wall Street Journal graph, from WTW data

Many Americans will see higher health-care coverage costs during fall open-enrollment periods. "Health-insurance costs are climbing at the steepest rate in years, with some projecting the biggest increase in more than a decade will wallop businesses and their workers in 2024," reports Anna Wilde Mathews of The Wall Street Journal. "Costs for employer coverage are expected to surge around 6.5% for 2024, according to major benefits consulting firms Mercer and Willis Towers Watson.

Coverage pricetags will be painful for employers, families and individual participants. Employers "already average more than $14,600 a year per employee," Mathews writes, "driving up health-insurance costs that are among the biggest expenses for many American companies and a drain on families' finances. . . . For people who have individual insurance plans sold under the Affordable Care Act, premiums are also expected to rise by about 6% next year, according to public insurance filings analyzed by health-research nonprofit KFF."

"Among the factors leading to the faster health-insurance cost growth are hospitals' higher labor costs and heavy demand for new and expensive diabetes and obesity drugs," Mathews explains. "The employer-plan increases are expected to strike businesses of all sizes. . . . For several years, health-coverage costs nationally increased relatively slowly, partly because the pandemic chilled doctor and hospital visits. Yet hospitals have had to hike wages for nurses and pay more for other expenses."

Some companies will increase employee costs, bumping up co-pays and deductibles to cover premium costs, but other businesses will opt to pass the expense onto customers. Mathews reports, "Many employers are expected to take on the lion's share of the increase, partly due to a labor market that remains tight in many sectors, benefits consultants said." Inflation has also made its way into the equation. Tim Stawicki, the chief healthcare actuary at Willis Towers Watson, told the Journal: "The inflation we saw a year ago is finally making its way into the [health care] contracts. It's like a delayed reaction."