Health Plan Weekly

A program that provides non-medical interventions for North Carolina’s high-risk Medicaid population resulted in cost savings and fewer hospitalizations, according to a third-party analysis and speakers who participated in a recent Manatt, Phelps & Phillips LLP webinar. Heidi Chan, market president for AmeriHealth Caritas, said the Healthy Opportunities Pilots (HOP) “is truly an innovative program” and helps provide “whole-person care” for vulnerable beneficiaries who suffer from food, housing and transportation insecurity. 

Kody Kinsley, secretary of the North Carolina Dept. of Health and Human Services (NCDHHS), added that the state launched the HOP in March 2022 as part of a CMS Section 1115 waiver amid the state’s push to better serve rural and low-income residents. The state also expanded Medicaid eligibility starting in July 2021 to people between 19 and 64 years old with incomes up to 138% of the poverty level. 

In 2024, per capita health spending growth is estimated to have slowed to 4.5%, and growth is expected to slow further in 2025 and 2026 to 4.2% and 4.3%, according to the Peterson-KFF Health System Tracker. The chart collection, which uses National Health Expenditure projections from federal actuaries, also found that from 2027-2032, per capita spending growth is projected to moderate at an average annual rate of 5%. Looking at the data by payer, Medicaid is an outlier: CMS actuaries project that per-enrollee Medicaid spending will grow by 10.2% in 2024, the highest rate in over 30 years, but it will average 5.4% between 2025 and 2032 since the expiration of the pandemic-era continuous enrollment provisions will provide for more normalized enrollment. From 2025-2032, per-enrollee Medicare spending growth is expected to range between 4.9% and 6.5%, while per-enrollee spending growth in the private insurance market is expected to decelerate in 2025 and 2026 to an average of 4.9% annually. And from 2027-2032, per-enrollee private insurance spending growth is expected to stay between 4.6% and 5.1%. 

In a development that drew mixed reactions from analysts, CVS Health Corp. is reportedly considering breaking up its diversified health care enterprise due to the poor performance of its Aetna health benefits division.

The news of CVS’s deliberations on the company’s future — reported by multiple outlets citing anonymous sources — came shortly after a hedge fund investor reportedly met with CVS executives to offer ideas about turning the company around.

“I’m not surprised that activist investors are becoming involved,” says Brad Ellis, senior director in Fitch Ratings’ North American insurance rating group. “I was a little surprised by the news…that they’re mulling a breakup of their company.”

Employers expect their health care costs will increase next year at a higher rate than in previous years, as they continue to deal with inflation and other headwinds, according to recent surveys and database analyses from major benefits brokers. Actuaries from two of those firms tell AIS Health, a division of MMIT, that the increases are being driven by a few factors, including higher reimbursement for hospitals and providers, a rise in care utilization now that the coronavirus pandemic is over, and a higher percentage of people using expensive specialty medications and GLP-1 drugs.  

Aon predicts the average cost for employer-sponsored health plans will increase by 9% in 2025, up from a 5.8% increase this year. Meanwhile, WTW projects a 7.7% increase in health care costs next year compared with a 6.9% increase this year and a 6.5% increase last year. Mercer anticipates a 7% increase in costs for employer plans in 2025.