Top 4 Reasons Healthcare
Costs are Rising for 2025

We all know healthcare costs increase annually. Medical trend increases are based on higher costs for prescription drugs, advancement in medical technologies, reinsurance costs and regulatory changes. So, what are the reasons for the higher than normal premium rates as we approach 2025? The aftereffects of COVID are creeping into the system. 

Following is a few of the consequences of the pandemic:

1. Many of the experienced nurses who shouldered the responsibility of caring for COVID patients were burned out. 

These brave medical personnel, who normally would have continued to work in the industry longer; left the field of nursing, which created a shortage. Higher wages, bonuses and hiring traveling nurses were the only way to keep facilities staffed to take care of patients. This increased expenses at all hospitals.

2. Beginning in 2021 through 2023, inflation has more than doubled compared to the previous 20 years. 

 This has not only impacted interest rates but also the cost of goods and services provided by health care organizations.

3. Health insurance companies were previously locked into 3-5 year reimbursement contracts with hospitals that would not let the hospitals receive more money for their services.

As the contracts come to term, hospitals are looking to recoup their losses and want insurance carriers to pay more for services.

4. We are still seeing an increased use of healthcare post-pandemic by those who delayed treatment and are either catching up on their treatments or have a chronic condition that has progressed which has placed them in a worse state. 

The list above highlights some of the key reasons why we anticipate you will see higher than normal rate increases than in the past. If you have any questions or would like to have a conversation, please reach out to us at Rose Street Advisors.

Chris Werme

LIC | Employee Benefits Advisor

As an advisor, Chris partners with clients to develop benefit strategies that meet organizational goals, budgets and company culture. From his background in accounting, he has a talent in picking out trends arising from claims data, reviewing analytics and negotiating renewal pricing with underwriters that serve his client’s well. He is an advocate in the healthcare world for his clients and their employees. On a personal note, Chris enjoys family and friends, especially while traveling, playing golf or boating. He is also a ‘Proud Papa’ to three grandsons!.

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