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March 14, 2024

2023 Employer-sponsored health care: A year in review

Garrett Gomez, FSA, MAAA

The current state of the employee health and benefits market

As we venture further into 2024, it is crucial to have a comprehensive understanding of the current state of the market for employer-sponsored health care coverage. The health care landscape continues to undergo significant transformations, influenced by various factors and events.

Health care inflation remains a pressing concern, with costs steadily rising. This inflationary pressure is driven by increasing drug prices, rising health care utilization, and the introduction of expensive gene therapies. Additionally, claims volatility has become a prominent issue, as unexpected spikes in health care utilization and high-cost treatments contribute to the unpredictability.

In the pharmaceutical space, glucagon-like peptide 1s, or GLP-1s, have emerged as a promising solution for managing diabetes. These medications have shown effectiveness in improving patient outcomes and reducing health care costs associated with diabetes-related complications. However, tight utilization management is critical to ensure proper patient treatment usage and to avoid potential overspending.

Provider negotiations have become increasingly complex and disruptive, as health care systems and insurers strive to balance quality care and cost containment. Employers are also actively exploring market point solutions that offer targeted interventions to manage specific health care needs. They aim to address rising health care costs effectively and increase care access.

Outside forces

Economic uncertainty and the upcoming election add additional complexity to the market. Employers must navigate these uncertainties and carefully consider strategic approaches to manage health care costs while ensuring the well-being of their employees. Alternative funding strategies, including self-funding with stand-alone stop-loss or a captive, continue as the preferred means for employers to gain more control over health care spending and mitigate financial risks.

In 2024, employers will navigate an evolving employee health and benefits landscape by focusing on tailoring their benefits program with four key considerations that guide their program strategy:

  • A multi-generational workforce
  • The importance of comprehensive and customized benefits
  • Whole-person health value
  • Health care cost optimization

National medical and pharmacy claims trends

We analyzed our national book of business health plan utilization with data through December 31, 2023. This analysis reviewed the aggregate impacts of current market trends on fee-for-service gross medical and pharmacy claims.

In 2020, claims trends were historically low, as the decrease in non-emergency medical care outweighed the increase in COVID-19 testing and treatment. Health care claims rebounded in 2021 and 2022, but to levels still slightly less than pre-pandemic trend expectations. Throughout 2023, claims trends returned to levels consistent with pre-pandemic historical trends.

This chart illustrates our national fee-for-service medical and Rx actual claims compared to expected claims since the beginning of the pandemic.

Strategic focus areas in 2024

Employers managing fully insured, level-funded, and self-funded health plans face continued volatility and uncertainty. As stakeholders assess future priorities, focusing on these action items will maximize health plan value, improve employee health and well-being, and mitigate risk:

  • Review historical and emerging claims experience to analyze plan performance from a financial and clinical perspective.
  • Evaluate detailed renewal underwriting and forecasting analysis to ensure competitive premium ratings.
  • Build a comprehensive total rewards strategy addressing the trends of 2024, including key considerations such as a multi-generation workforce, the importance of comprehensive and customized benefits, whole-person health value, and health care cost optimization.

Reach out to a Marsh McLennan Agency specialist for to discuss how your organization can navigate the complex landscape of health care claims. We are here to be your trusted advisor and will discuss how this analysis can transform your employee health and benefits strategy.

The health care claims landscape is complex.

We are here to be your trusted advisor and will discuss how this analysis can transform your employee health and benefits strategy.

Reach out to a specialist