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Rising Costs in Employer-Provided Health Care Linked to Weight-Loss Drugs and Inflation

by sun

 

In a recent study, employer-provided health insurance expenses experienced a notable surge this year, attributed to the combined effects of inflation and escalating costs associated with weight-loss drugs. The findings, presented by human resources consulting firm Mercer, reveal a 5.2% increase in the average per-employee cost for health coverage in the United States, reaching nearly $15,800 for the year 2023.

Mercer’s research, which is part of the Marsh & McLennan (MMC) group, underscores the significant deviation from the historical trend, surpassing the average annual increase of approximately 3% recorded since 2012. Comparatively, health coverage costs had risen by 3.2% in the preceding year, 2022.

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The surge in employer-provided health care expenses is attributed to a confluence of factors, with weight-loss drugs and general inflation playing pivotal roles, as outlined in Mercer’s comprehensive survey. The report indicates an 8.4% increase in pharmacy benefit expenses, driven by heightened demand for prescription drugs, particularly those aimed at aiding weight loss.

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Notably, the expanded use of glucagon-like peptide 1 (GLP-1) drugs, employed in the treatment of diabetes and obesity, including medications like Novo Nordisk’s Ozempic and Wegovy, has been a significant contributor to the spike in costs. Mercer emphasizes that the high cost of these medications, coupled with the substantial number of patients requiring them, results in a considerable net new cost to health plans. Given their classification as maintenance drugs, insurers may find themselves covering these costs over an extended period.

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Sunit Patel, Chief Health Actuary at Mercer, pointed out a concerning trend revealed by the survey: Employers anticipate a further 5.2% increase in the cost of health coverage in 2024. Patel suggests that this ongoing financial burden is likely to persist due to the delayed impact of rising healthcare worker wages and increasing medical supply costs, projecting that it may take a couple of years for these factors to significantly influence health plan costs.

As employers grapple with these escalating health care expenses, the broader implications of this trend on the workforce and the economy remain a subject of ongoing concern.

 

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