The Pulse from UnitedHealthcare: Cost trends facing employers

Katy Curry-Lorusso, vice president of health care economics, offers a look into the cost trends she’s seeing across the health care industry.


Katy Curry-Lorusso, Vice President, Health Care Economics, UnitedHealthcare Employer & Individual

Rising health care costs are a pressing concern for employers nationwide, impacting both their bottom line and their employees' well-being. As the landscape of health care evolves, so do the challenges and opportunities for containing these costs — and that’s where the health care economics team at UnitedHealthcare Employer & Individual proves so useful. 

Forecasting health care cost trends

How do we analyze cost trends?

The health care economics team at UnitedHealthcare is at the forefront of tracking and analyzing health care cost trends. We meticulously monitor the industry for emerging patterns and compare these trends with our own extensive claims data. This dual approach provides a deep understanding of the cost dynamics shaping the health care landscape.

When analyzing cost trends, the team breaks down the data into 4 key elements:

Unit cost – examines the price changes for specific services, such as the cost of a doctor visit from one year to the next.

Utilization – focuses on the frequency of health care services used, for example, comparing the number of doctor visits or hospital stays year over year to help identify whether the increase in costs is due to higher prices or more frequent use of services.

Severity and mix – evaluates the types of services utilized and their proportions. For instance, did the proportion of virtual visits increase compared to office visits? Did urgent care visits replace some emergency room visits? Understanding these shifts is crucial as they can significantly impact overall costs.

Workdays – assesses changes in the number of working days from one year to the next, which can also influence health care utilization and costs. For instance, a leap year may have more workdays than a regular year or a year with a holiday that falls on a weekend may have more workdays than one that has that holiday on a weekday. Ultimately, more workdays means more system capacity for services or utilization (or relatively more costs in that year).

What cost trends are we seeing?

The contemporary health care cost landscape presents a complex challenge for employers, with steadily rising trend over the past decade exerting significant financial pressure.

The COVID-19 pandemic dramatically altered health care utilization patterns. Initially, the pandemic saw a marked decrease in nonemergency health care services as individuals postponed routine care and elective procedures. However, as the pandemic plateaued, health care utilization rebounded. As we leave this volatility behind us and enter a new normal, employers will need to swiftly adapt their strategies, ensuring their health care plans are both economical and responsive to the evolving needs of employees.

A particularly significant driver in recent years has been the rising cost of managing chronic conditions such as diabetes, heart disease and cancer. These diseases require continuous management and treatment, which can be financially taxing. For instance, the introduction and ramp-up in utilization of GLP-1 drugs to treat both diabetes and weight loss brings ongoing cost pressures to many plans. The acceleration of expensive gene therapy drugs has also contributed to this trend. While these therapies offer revolutionary treatment options for rare and previously untreatable conditions, their high price tags can significantly strain employers' budgets.

Another notable trend is the growing demand for behavioral health services, spurred by the stress and isolation brought on by the pandemic, particularly among kids.

How can employers manage those trends?

To effectively manage rising health care costs, employers may adopt proactive strategies that align with their unique goals and employee needs.

Investing in the right plans and networks. Health plans and networks designed to provide clear information on the costs of different providers, sites of care and procedures may empower members to make informed decisions on choosing care that offers the best value, which work to reduce overall expenses. This transparency not only fosters a sense of responsibility among employees but also helps ensure that they receive access to high-quality care that meets their specific needs.

Adopting clinical and care management strategies. UnitedHealthcare offers robust programs that support employees and their covered family members with a combination of timely outreach, clinical support and personalized information on everything from preventive health screenings to chronic condition management. By addressing health issues proactively, employers may reduce the incidence of costly emergency room visits and hospitalizations. Additionally, these strategies help ensure that employees receive timely and efficient care, promoting better health outcomes and overall employee satisfaction.

Working with a carrier that eliminates health care waste. UnitedHealthcare is committed to reducing redundancies and waste in the health care system. By identifying and eliminating unnecessary services and administrative inefficiencies, employers may see significantly lower overall health care costs.

Managing these health care cost trends requires a multi-faceted approach that includes transparency, waste reduction and clinical and care management to be successful. Our robust cost management strategies are designed to help employers achieve these goals, while also keeping employee health and satisfaction a top priority.

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