Why Nevada’s Health Insurance Costs are Rising for Employers in 2024

The rise in health insurance costs is impacting businesses nationwide, and Nevada is no different. As we navigate the changing healthcare landscape in 2024 and beyond, Nevada faces the task of addressing rising medical costs, increasing provider fees, and other factors pushing up health insurance costs for small businesses.

Considering that health insurance stands as the #1 benefit employees consider when choosing their employers, it becomes imperative for Nevada’s small businesses to strike a balance between cost increases and the attraction and retention of top-tier talent. 

Read on to learn about the evolving market dynamics and workforce trends directly contributing to the surge in Nevada’s health insurance costs for 2024. 

Key Driver of Premium Changes in 2024: Inflation 

Nevada businesses have been grappling with a pressing concern that directly impacts their bottom line: the steady increase in healthcare premiums. One of the key drivers? Inflation. As prices for goods and services across the economy continue to rise, healthcare costs are no exception. Inflation affects not only the cost of medical equipment, pharmaceuticals, and technology but also the wages and benefits of healthcare professionals. All of this translates into higher premiums for businesses, making it increasingly challenging to provide comprehensive healthcare coverage for employees while maintaining cost efficiency. 

Navigating this complex landscape calls for strategic planning and innovative solutions as organizations seek to strike a balance between offering quality healthcare benefits to their workforce and managing the financial impact of inflation on their operations.

Keep in mind: Medical inflation operates differently from general inflation, often exhibiting a delay of 7-13 months. While we anticipate a deceleration in general inflation during 2023, it’s noteworthy that medical inflation typically runs around 2% higher than general inflation and is poised to impact premium rates in 2024. This distinction underscores the importance of proactive financial planning when looking at employee benefit packages.

What’s causing Nevada’s health insurance costs to skyrocket in 2024?

The rise in medical costs can be attributed to these three driving factors:

#1. Increase in Provider Costs

The surge in healthcare provider costs is a significant factor fueling medical inflation within the healthcare industry. These rising costs stem from several factors, including the increased demand for medical services due to an aging population, technological advancements, and the expansion of healthcare coverage. Providers face mounting expenses associated with hiring and retaining skilled healthcare professionals, investing in cutting-edge medical equipment and technology, and complying with ever-evolving regulatory requirements.

Additionally, the ongoing pandemic has introduced unforeseen challenges, such as the need for personal protective equipment and the strain on hospital resources, further driving up operational costs. In fact, an analysis from UNR’s Nevada Health Workforce Research Center found Nevada would need more than 4,000 new registered nurses to meet the national RN-to-population average and that roughly two out of every three Nevadans live in an area with a shortage of primary health care providers.  As healthcare providers cope with these mounting expenses, they often pass on these costs to consumers through higher service fees and insurance premiums, contributing to the overall inflationary pressure in the healthcare sector.

Pro-tip for employers: Health insurance companies will face the challenge of accounting for inflation’s impact on healthcare providers. It’s essential to remember that this process isn’t swift; it involves contract renegotiations, insurance carrier reviews, and the gradual integration of cost increases into employers’ premium rates. While cost growth may start in 2024, it’s anticipated to persist for an extended period. To stay financially prepared, consider proactively allocating extra resources to your healthcare budget in the years ahead.

#2. Rising Drug Prices

The price of prescription drugs has been on the rise for decades, with no hint of slowing down. According to a research letter in the Journal of the American Medical Association, the prices of new brand-name drugs increased by nearly 11% every year from 2008 through 2021.

The escalating prices can be attributed to several factors, including the continuous development of advanced and specialized medications, as well as the ever-evolving pharmaceutical landscape. 

Pharmaceutical companies are frequently raising the prices of their drugs, impacting both patients and healthcare systems alike. These price hikes have a cascading effect, leading to higher insurance premiums for individuals and employers.

In Nevada, we’re also feeling the pinch. Prescription drug prices have risen higher in Nevada than in any other state. Over the last three decades of data available from the federal government, Nevadans went from paying $247 per year for drugs in 1991 to $1,236 in 2020.

#3. Delayed Care

The COVID-19 pandemic has had a lasting impact on healthcare costs and inflation. One contributing factor has been the delay in seeking medical care by many individuals due to fears of infection or overwhelmed healthcare systems. As people postponed routine check-ups, elective procedures, and non-urgent treatments, their health conditions often worsened, necessitating more intensive and costly interventions when they did eventually seek care. This backlog of delayed medical services has placed additional strain on healthcare facilities and providers, driving up costs and contributing to inflation in the medical industry. As we move forward, addressing the repercussions of deferred care and promoting timely healthcare access will be essential in managing healthcare costs and ensuring the well-being of individuals and the healthcare system as a whole.

The increase in the amount of seriously ill patients, as highlighted by the American Hospital Association, has caused an increase in hospital expenses, particularly in labor, pharmaceuticals, and supplies. These escalating costs have presented a multitude of financial obstacles for healthcare providers.

A survey conducted among large employers supports these trends. A significant 43% of employers have reported increased expenses on medical services stemming from postponed healthcare, while 21% have noted a surge in disability claims linked to long-haul COVID cases. These findings highlight the financial challenges faced by both healthcare providers and employers in the wake of delayed care and pandemic-related health issues.

Other Contributing Factors To The Rise in Health Insurance Costs

Aging Workforce

An aging population means two things. One, many people are retiring right now, but on the other hand, many older people are choosing to work longer. For employers, retaining an older workforce is beneficial because of the valuable experience and years of knowledge you get,  but it also means higher labor costs, which include higher health insurance costs. Looking at the baby boomer generation, their age range is between 60 and 80 years old. As individuals progress in age, their healthcare needs become more frequent; therefore, their utilization of healthcare increases. This creates a surge in demand for medical services and healthcare resources, which in turn impacts healthcare premiums.

Chronic Health Conditions

According to data from the American Health Rankings, 10.4% of Nevadans have three or more chronic health conditions, including arthritis, asthma, chronic kidney disease, chronic obstructive pulmonary disease, cardiovascular disease (heart disease, heart attack, or stroke), cancer (excluding skin), depression and diabetes. 

Effectively managing these conditions often results in heightened utilization of healthcare services and associated costs, impacting various stakeholders, including employers. A recent survey conducted among employers has revealed that 34% of them are impacted by rising healthcare expenses directly linked to the increasing prevalence of chronic diseases.

The Mental Health Crisis

​​Lastly, it’s important to note that the pandemic has also triggered a substantial increase in mental health challenges, including conditions such as depression, anxiety, and substance use disorders. The persistent effects of social isolation, uncertainty, and pandemic-related anxieties have left a lasting impact on the mental well-being of employees.

As shown in the chart below, from February 1 to 13, 2023, 38.4% of adults in Nevada reported symptoms of anxiety and/or depressive disorder, compared to 32.3% of adults in the U.S.

With the increase of mental health conditions in our communities and businesses, employers are witnessing impacts, as evidenced by findings from a 2023 Aflac survey, wherein 42% of employers reported heightened benefit costs in the previous year due to an upsurge in incidents related to mental health.

Tips for Nevada Employers

The escalating expenses associated with patient care, driven by rising provider costs and surging pharmaceutical prices, are placing substantial financial pressures on both healthcare systems and insurers. Moreover, the repercussions of the pandemic, including deferred medical care, prolonged hospitalizations, and a surge in mental health concerns, are further exacerbating the upward trajectory of health insurance costs.

In the face of these challenges, two truths emerge: first, the cost of patient care is on the rise, and second, people are living longer but not necessarily healthier lives. As we approach the year 2024 and beyond, Nevada-based employers need to acknowledge these realities and prepare for the likelihood of escalating healthcare expenses due to medical inflation in the upcoming months and years.

To proactively address these challenges, employers can consider allocating additional funds for healthcare expenses and exploring the implementation of preventive wellness initiatives. By prioritizing employee well-being and promoting healthier lifestyles, employers can enhance the overall health outcomes of their workforce while potentially mitigating the long-term financial impacts on their organizations.

Read more about combating rising benefits costs during periods of high inflation.

Join a Nevada PEO

Teaming up with a Professional Employer Organization (PEO) in your state enables businesses to save money when offering healthcare benefits. You receive two main benefits when partnering with a PEO to handle your health insurance needs.

1. Offer better benefits at a lower cost. The co-employment model offered by a PEO allows small businesses access to benefits typically reserved for larger corporations. Employees gain access to health plans at more affordable rates than what the business could secure when purchasing coverage directly from insurance companies.
2. Reduced administrative burden. Small business owners frequently lack the time or inclination to shoulder the additional responsibilities of benefits management, yet they remain committed to offering top-notch health coverage to their employees. PEOs assume the admin duties associated with providing benefits, like handling the processing and paperwork. By alleviating these administrative burdens, you can concentrate on the growth and upkeep of your business.

Gear up for the upcoming Open Enrollment Period with AdvanStaff’s PEO services

When every dollar counts, get access to lower premiums, more stable rates, and save thousands of dollars over time in employer healthcare by partnering with AdvanStaff HR. 

We offer lower annual renewal rates than what’s available on the market, ensuring our client companies receive highly competitive healthcare options year over year. 

Ready to start saving? Schedule a call with an HR Consultant today to learn how partnering with a local Nevada PEO can benefit your business.