5 reasons medical costs are rising, according to payers

The nation's largest insurers have warned of increasing medical costs next year, driving up medical loss ratios and member premiums. 

In the individual and small group markets, some payers have requested rate increases to keep up with anticipated rising costs in 2024. 

Here are five factors behind the trend, according to payers: 

1. More outpatient procedures: Older adults are seeking surgeries and other care delayed during the COVID-19 pandemic, payers have said. UnitedHealthcare executives told investors outpatient costs are rising among the Medicare Advantage population, especially for cardiac and orthopedic procedures. In a June 16 SEC filing, Humana warned of a similar trend, with emergency care, outpatient procedures and dental services contributing to rising costs. 
   
   
2. More people are seeking behavioral healthcare: UnitedHealthcare executives told investors more people are using behavioral health services. The trend is happening across all populations, the company said. In June, Centene CEO Sarah London said behavioral health is one of the areas where care costs are rising fastest. 
   
   
3. Demand for weight loss drugs: Expensive weight loss drugs like Ozempic are contributing to rising costs, several payers said. BCBS of Massachusetts told the Boston Globe it expects spending on weight loss drugs to triple in 2023 compared to last year. BCBS of Michigan said increasing demand for the drugs is one the factors driving proposed premium increases in the individual insurance market. 
   
   
4. COVID-19 vaccine and test costs: The end of the COVID-19 public health emergency will shift more of the cost of COVID-19 vaccines and tests to insurance carriers and consumers, according to a report from the American Academy of Actuaries. This could increase premiums or cost-sharing for plan members, according to the report. 
   
   
5. Medicaid redeterminations: Millions of people who are no longer eligible for Medicaid are expected to shift to ACA exchange coverage in 2023. It is unclear if this will increase or decrease risk in these market pools, which could affect premiums, according to the American Academy of Actuaries.