Understanding Trends

Trend is a forecast of per capita claim cost increases that take into account various factors, including price inflation, utilization, government-mandated benefits, and new treatments, therapies and technology. Trend is the estimated increase in future healthcare costs.

Although there may be a high correlation between a trend and the actual cost increase assessed at renewal, trend and the net annual change in plan costs are not necessarily the same.

• Renewals close the gap between health care fees and actual plan costs
• A client can experience a 5% trend and could receive a 10% renewal because health care fees may account for prospective costs that will be incurred in the future (small group claim experience is not credible and has a higher degree of volatility)
• Renewals will vary nationally based on regional pricing variations, state required plan design changes and changes in provider rates

Other factors that impact renewals include, but are not limited to:

• High-cost claims
• High ER usage over other more cost-efficient care when applicable
• Rx specialty drug utilization
• Obtaining services in-network vs. out-of-network

Click here to learn more about healthcare trends vs renewals.

Price Inflation Impacts*

Price inflation could be impacted by:

• Declining population health
• Increased demand for mental health and substance uses disorder services
• Impact of economic inflation related to provider contract renewals
• Shortage in supplies and healthcare worker staffing challenges
• Provider consolidation, new treatments and technology
• Specialty drugs/biologics, which have a higher projected double-digit trend for 2024 at a rate of 14.5% driven by higher utilization and now account for more than 50% of spending

2024 General Health Care Trend Inflators*

Inflator: Hospital Services

Rising hospital prices remain a significant cost driver. Many hospitals are facing narrow profit margins due to various factors such as labor costs, recovering from the pandemic, inflation, advancements in technology and legislative reforms. Price disparities vary significantly by market, with studies suggesting that consolidation leads to increased costs with minimal differences in quality.

Click here to learn about the impacts of COVID-19 on the health care system.

Inflator: Physican Services

The second major driver of medical plan cost trends is the rising prices of physician services. This increase is primarily driven by inflation, higher negotiated contract renewal rates and consolidation activities, such as mergers between physician groups, vertical consolidation and private equity acquisitions of physician practices. The pandemic-induced economic challenges and inflation have also contributed to these increased rates.

Inflator: High-Cost Claimants

When analyzing trends, high-cost claimants are a significant factor driving rising prices. Understanding the potential impact of high-cost events, including their increased frequency, is crucial for assessing a plan's overall experience. Several factors contribute to high-cost events, including an aging population, the increasing prevalence of chronic conditions and the introduction of expensive new treatments, especially gene therapies. Gene therapy entrants into the marketplace have increased by an order of magnitude from two in 2021 to an expected 20 in 2024 with an additional 50% forecasted growth over the next three years. The average cost of gene therapies ranges from $2.4M to $3.4M per claimant.

Inflator: Telehealth and Mental Health Services

While the high utilization of telehealth services experienced during the peak of the pandemic has decreased, it continues to result in a net increase in acute care visits and mental health services for most plans. According to SHAPE data, there was a 25% increase in emergency room visits related to suicide from 2018 to 2022. Mental health comorbidity has become increasingly common among high-cost participants.

Click here to learn more about the impacts of telehealth and mental health services

TriNet Resources:

• Telemedicine options for mental and behavioral health are available within most of the TriNet-sponsored medical plans. Telemedicine for mental health can provide access to mental health services and professionals without traveling, waiting or compromising privacy. This may increase the likelihood of people getting the care they need, when they need it. The use of telemedicine may save money over the long term by potentially avoiding in-or-outpatient services.
• The Employee Assistance Program (EAP) through FEI is a great resource to help support worksite employees on a wide range of issues including mental health, relationships, stress, finding support resources and more. There is no cost, no registration and it is completely confidential. All full and part-time worksite employees have access to the EAP.
• TriNet-sponsored medical carriers have a wide array of resources to support mental and behavioral health from specific programs to apps to talk therapy.

Inflator: Higher Cost Pharmaceuticals

High-cost specialty Rx utilization continues to expand as new specialty therapies enter the market and the average cost per day’s supply for specialty Rx is over 50 times greater than the average cost for non-specialty medications. GLP-1s for diabetes and anti-obesity treatments (when allowed by the plan) average over $5,000 per claimant per year. Additionally, public health stockpiling for COVID-19 treatment has wound down: previously, cost for COVID-19 antivirals was paid for by the federal government. Average wholesale price for Paxlovid is now over $1,600 per course.

Click here to learn more about the rising costs of GLP-1s.

2024 General Health Care Trend Deflators*

Deflator: Use Health Navigators or Health Advocate Services

Health navigators and health advocate services have exceeded the requirements of transparency regulations by assisting participants in maximizing their healthcare benefits. These patient advocacy services typically involve identifying high-quality providers, offering personalized health recommendations, guiding participants to preferred provider options and sometimes assisting with appointment scheduling.

TriNet Resources:

• Health Advocate is available to worksite employees enrolled in a TriNet-sponsored medical plan. The Health Advocate team of nurses and billings/claims specialists can help worksite employees get the answers they need from resolving claims and billing issues, understanding treatment options and more.
• Benefits Decision Support—Powered by Healthee, is an integrated application within the TriNet platform that helps eligible worksite employees better understand the value of their TriNet-sponsored medical, dental and vision benefit options (if applicable), so they can identify the plan(s) that best fit their needs and make informed benefit elections.

Deflator: Promote Use of Wellness Program

Wellness programs promote healthy behaviors among employees, such as regular exercise, healthy eating and preventive screenings. By detecting health issues early or preventing them altogether, people are less likely to require costly medical treatments.

TriNet Resources:

• Preventive care, such as cholesterol and cancer screenings, along with annual well visits are important for early disease detection and intervention. TriNet-sponsored medical plans cover preventive services at 100% in-network.
• Wellness support is available through the TriNet-sponsored medical plans at no additional cost to worksite employees. Access to gym membership discounts, nutrition guidance and many other valuable resources support overall well-being.

Deflator: Mail Order and Home Delivery of Rx

There are cost savings when mail order programs are used to fill scripts vs. using retail pharmacies.

TriNet Resources:

• Prescription delivery combines the convenience of at-home delivery and money savings for worksite employees, with the potential to lower overall pharmacy-related costs. Setting up automatic delivery may lead to better adherence to medications, which can assist in managing overall health. All TriNet-sponsored medical plans offer prescription delivery services..

Deflator: Biosimilars

Most specialty drugs are biologics derived from viruses or living organisms; biosimilars are "highly similar” to existing biologic medications (akin to generic versions of traditional non-specialty brand drugs) and represent potential savings over the unit cost for existing brand-name specialty Rx. Early indicators for Humira biosimilars reveal unit cost savings and increased adoption in 2024. Formulary management to incent or restrict use to biosimilars when available helps control specialty pharmacy costs. Increased introduction of biosimilars for other blockbuster specialty drugs (Stelara, Simponi, etc.) likely over the next few years as biosimilar manufacturers work through FDA approvals alongside brand-name patent challenges.

Companies can help bend their cost trends by educating worksite employees in the following ways:

• Encourage value-based care
  • Tiered networks, which offer a preferred tier option directing worksite employees to high-quality providers with deeper discounts.
  • Utilizing centers of excellence (COE) to guide worksite employees towards specialized treatment providers with expertise and resources, resulting in reduced costs and improved outcomes.

• Promote the use of virtual care, these include digital health coaching, behavioral health, chronic-condition management and primary care (varies by carrier)
• Encourage annual wellness visits and preventive screenings
  • Early diagnosis can reduce future costs or prevent catastrophic costs.
  • Oncology is now the number one diseases category in terms of health cost spending. Promote screening recommendations and educate worksite employees on benefits of early detection.
• Cost management options for coverage of GLP-1s
  • Provide educational support around safe exercising and promote virtual coaching.
  • Educate on available fitness programs and nutrition resources.
• Encourage the use of healthcare transparency tools for procedures
  • Setting matters and can have a material impact on cost drivers.

Click here to learn ways to potentially reduce health care cost through behavior change.

_{*2024 Segal Health Plan Trend Survey}