Written by: Dan McGill
Health insurance spending is projected to rise by 8.0% for group markets and 7.5% for individual markets between 2024 and 2025—the highest increase in 13 years. This sharp growth is fueled by persistent inflationary pressures, rising prescription drug costs, and increased demand for behavioral health services, with no significant cost-reducing measures on the horizon.
The inflationary trends impacting the healthcare sector since 2022 are expected to persist into 2025, as providers continue to shift their rising operational expenses onto health plans. The expanding use of GLP-1 drugs is poised to further drive-up medical expenses. Meanwhile, innovations in treatments for chronic conditions and higher utilization of behavioral health services continue to push costs upward. Although biosimilars may provide some relief, they are unlikely to fully offset these pressures.
In response to these challenges, healthcare price transparency has emerged as a critical tool for promoting accountability and enabling more informed decision-making. Since its introduction in 2019, transparency initiatives like the Hospital Price Transparency Rule, the No Surprises Act, and the Transparency in Coverage Rule have significantly enhanced visibility into healthcare costs.
For example:
The Hospital Price Transparency Rule requires hospitals to publish standard charges in a machine-readable format.
The Transparency in Coverage Rule mandates insurers and employers to disclose negotiated rates and out-of-pocket cost estimates.
The No Surprises Act protects consumers from unexpected out-of-network charges and introduces Good Faith Estimator tools.
While these efforts have laid a strong foundation, the challenge remains in transforming this transparency into actionable insights that genuinely benefit employers, employees, and other stakeholders. This is where broker-consultants play a pivotal role.
How Capstone Can Help
Data is power. Despite recent legislation, obtaining detailed claims and utilization data continues to be a challenge. That said, there are strategies and emerging technologies that forward-thinking broker-consultants can utilize to access this information to best insulate groups against inflationary pressures.
Obtaining the data is only the first step. Once received, that data needs to be analyzed, organized, and interpreted in order for it to have any value to an organization from an underwriting perspective. The last step in the process is the development of targeted strategies to address trends and reduce claims spend moving forward.
Our Capstone Benefits Team stresses the substantial value to be realized through more proactive employee education. This includes clear explanations of formularies, deductibles, cost-sharing, and utilization management techniques like prior authorization and step therapy. By incorporating real-world examples and online tools that illustrate patient cost-sharing responsibilities, we empower employers and members to make informed healthcare decisions.
In behavioral health, where demand continues to rise, Capstone takes a two-pronged approach. Our internal advocates help employees navigate the challenge of actually accessing quality care, while also working closely with employers on common issues such as reimbursement challenges and balance adequate coverage for mental health services with controlling medical expenses.
With providers expected to impose greater unit cost pressures in the coming years, Capstone can guide health plans in adopting innovative strategies that enhance affordability while continuing to stress quality of care.
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