May 11, 2023
According to a Mercer poll released in December of 2022, employers are expecting a significant hike of 5.4% in health benefits costs in 2023. Experts also state that they should be prepared for continued accelerated cost growth in 2024 and beyond.
This is part of an overall upward trend as the average per-employee cost of employer-sponsored health insurance already increased 3.2% in 2022. Furthermore, that year also saw a spike in cost growth to 6.3% as people caught up on their healthcare needs that they delayed due to the pandemic lockdowns.
The increase in 2022 is also far below general inflation, which is averaging about 8% for 2022. This is significant because health benefit cost-growth typically runs higher than general inflation.
Industry experts have concluded that higher wages, labor shortages, and consolidation will most likely cause higher prices in the healthcare sector.
Additionally, the main reason that cost growth lagged behind inflation in 2022 was because healthcare providers typically have multi-year contracts with health plans. As a result, employers were not immediately adversely affected by the inflation, but will probably feel the cost increases from in the next few years as contracts are renewed.
Although these costs are increasing, potential employees are still valuing competitive and comprehensive benefits packages more than ever. This includes ancillary benefits in addition to conventional health insurance. In fact, providing great benefits is one of the primary ways that employers can attract and retain the top talent.
Find an Amwins Connect Sales Representative to learn more about how we can help with these rising costs.
