CMS Projects Employer Healthcare Spending Increase to $1.3 Trillion

Analysts have newly released data projecting increased healthcare spending nationwide in 2024, impacting individuals, employers, carriers, and, of course, you—the benefits broker.

Is Healthcare Spending Increasing?

Healthcare spending in the U.S. has been trending upward for decades. In 2019 alone, national health expenditures grew by 4.6% to $3.8 trillion, accounting for 17.7% of the GDP, according to the Centers for Medicare & Medicaid Services (CMS). New projections suggest this trend will continue, although 2024 looks better than 2023, when the projection was 10.2%. 

2024’s reported predictions include: 

• Employer spending on healthcare will increase by 5.8% to $1.3 trillion 
• Individual healthcare spending will increase by 6% to $7,459 

The big kicker? Due to the increasing healthcare costs and other cost-of-living increases, enrollment is projected to decrease by 0.2%, down to 178 million. 

As healthcare becomes less affordable, enrollment rates drop. How does this impact employers and their advisors?

How Increasing Healthcare Costs Impacts Employers

Carriers will offer higher insurance premiums as employers enter renewal periods. This increase can strain company budgets and affect profitability, particularly for small and medium-sized businesses. Additionally, employee retention may become more of a problem for your clients, as employees seek larger companies that can afford to mitigate healthcare costs with more robust, employer-sponsored rewards offerings. 

You may see an effort to manage rising costs with a shift toward high-deductible health plans (HDHPs), or exploratory questions about alternative options that lower costs. Many employers also show a growing interest in wellness programs that intend to reduce healthcare costs by promoting healthier lifestyles.

5 Strategies for Benefits Brokers to Battle Rising Healthcare Costs

Your employer clients are tired of rising premiums. They will lean on you for a solution to lower their costs. Here are some strategies to remain solution-focused and earn the loyalty of your employer clients.  

1. Expand Your Advisory Role: With the increasing complexity of healthcare plans and cost management strategies, brokers are evolving from mere intermediaries to strategic advisors. You must be well-versed in the nuances of various health plans, cost containment strategies, and regulatory requirements to provide valuable guidance to your clients. Many brokers are turning to technology as a solution for client retention and attraction, which can also offer cost-saving measures for you and clients if you partner with a benefits administration platform like BerniePortal.  
   
   
2. Customize Solutions Even More: As employers seek ways to manage costs while providing attractive benefits packages, brokers must offer more customized solutions. This includes tailoring health plans to meet the specific needs of different employee demographics and exploring innovative benefits options such as telemedicine and wellness programs. Consider using health questionnaires like BernieForms, a native aspect of BerniePortal’s ben admin system. 
   
   
3. Enhance Analytics and Reporting: To help clients make informed decisions, brokers need to leverage advanced analytics and reporting tools. These tools can provide insights into healthcare utilization patterns, identify cost drivers, and measure the effectiveness of implemented strategies. 
   
   
4. Focus on Employee Education: Brokers are crucial in educating employees about their health benefits. In fact, you’re the first line of defense, and your clients will appreciate how you go the extra mile and protect their time and energy from workforce confusion. As plans become more complex, providing clear and accessible information to employees is essential. This includes conducting benefits workshops, creating informative materials, offering easily accessible videos and collateral, and providing one-on-one consultations. 
   
   
5. Stay Updated with Regulatory Changes: The healthcare sector is highly regulated, with frequent changes to laws and regulations. You must stay abreast of these changes to ensure compliance and help your clients navigate the regulatory landscape. Attend webinars, subscribe to blogs and newsletters, and attend conferences to learn what your industry anticipates in the future—and how you can get ahead. 

Additional Resources:

• Brokers’ Corner Podcast—watch and subscribe to the Brokers’ Corner podcast, which dives into the topics that affect your agency and industry and identifies strategies so you can protect and grow your book of business 
• BerniePortal Brokers’ Council—a council of benefits brokers from across the country that advises BerniePortal on industry concerns, trends, and the ways technology can best support their agency and employer groups 
• BerniePortal for Brokers—leveraging technology to increase your agency valuation and support your employer groups is easier than ever with BerniePortal’s software solution, built for brokers by brokers