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Across the U.S., CFOs, HR directors and CEOs at companies of allsizes are grappling with what to do in the face of unsustainablehealth insurance program cost increases. After all, how do you budgetfor seemingly endless annual premium rate hikes that typicallyrange from a "low" of 7 percent to upwards of 12 percent andbeyond? We are not talking small dollars here—a 10 percent renewalincrease could represent a six-digit increase in overall premiums.When does it become unsustainable? Many will say the answer isyesterday.
There are multiple reasons why annual increases in the cost ofmedical care persistently outpace general inflation, and why thereappears to be no end in sight. The ongoing emergence ofgroundbreaking gene therapies, specialty drugs and innovativecancer treatments, together with the increasing power of providers(e.g., via hospital mergers), will continue to put pressure oninsurers to pass along the resulting higher health insurance coststo employers.
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