Healthcare Costs Just Keep Rising
Want to take a guess at what the cost is of a family of four covered by an average employer-sponsored preferred provider organization (PPO) plan in 2022? Let’s just say it’s now north of $30k. In fact, according to the latest Milliman Medical Index (MMI), the cost is $30,260. Ouch.
While 2020 marked the first time in the MMI’s history that healthcare costs decreased year over year, the reprieve was short-lived. Healthcare costs came roaring back with a 13.2 percent trend. According to the MMI’s article, this rate, driven by a forecasted rebound in healthcare use, is higher than historical healthcare cost increases and gross domestic product (GDP) growth over the past five years.
Why are Healthcare Costs Increasing?
What’s the cause? There are a number of reasons, the biggest of which I believe fall squarely in line with the pandemic. Plus, according to this article (and outlined below), the pandemic will continue to cause spending increases.
Deferral of Healthcare during the Pandemic Will likely Return
Healthcare spending by employers in 2020 was lower than expected, in large part because of the deferral of care as a result of the pandemic. Some of this care is expected to rebound in 2022, and some of it likely will increase healthcare spending.
COVID-19 Healthcare Costs Are likely to Persist
The costs of testing for COVID-19, treating patients, and administering vaccinations for the disease likely will continue into 2022.
The Mental Health and Substance Use Crises Show No Signs of Waning
The pandemic substantially increased demand for mental health services. Increased substance use also likely will increase healthcare spending in 2022.
Population Health Worsened during the Pandemic
Poor pandemic-era health behaviors, such as lack of exercise, poor nutrition, increased substance use, and smoking may lead to deterioration in U.S. population health and increase healthcare spending.
What Can Be Done to Help with Rising Healthcare Costs?
It’s important for all employers to understand healthcare trend pressures and how to respond to the overall economic inflation impact on these trends.
At Holmes Murphy, we have a unique strategic approach around program design, clinical risk, and procurement that can help you reduce risk and lower cost. If you’d like to discuss these items, the trends in general, or how we can help you, feel free to reach out to us. We’re happy to help!
Published on: 07.28.22