Aug 16, 2022
Employers expect health benefit costs to rise an average of 5.6% per employee in 2023, according to a Mercer survey. “Employers have a small window to get out in front of sharper increases coming in 2024 from the cumulative effect of current inflationary pressures,” says Sunit Patel, Mercer’s Chief Actuary for Health and Benefits. He says that we haven’t felt the full effect of price inflation because of multi-year contracts with health care providers. Added costs will be phased in over the next few years as contracts come up for renewal and providers negotiate higher reimbursements.
While most large, self-insured employers have a good sense of their 2023 costs, many smaller, fully insured employers have not yet received renewal rates. “Those may well come in higher as insurance carriers hedge their bets in today’s volatile health care market,” Patel added. The projected increase of 5.6% reflects changes that employers plan to make to hold down costs. If they made no changes, respondents indicated that the cost for their largest medical plan would rise by an average of 7%.
Enhanced Benefits
Researchers asked employers to rate nine benefit strategies in terms of their importance over the next 3 to 5 years. Enhancing benefits to improve attraction and retention came out on top at 84% among large employers. It’s an even higher priority than monitoring and managing high-cost claimants, which was second this year but historically tops the list. Employers must manage rising health care costs while making smart decisions about attracting and retaining workers. “For now, we are seeing the majority of employers prioritizing attractive benefits,” says Tracy Watts, Mercer’s National Leader of US Health Policy.
No Cost Shifting
Despite rising costs, the majority of employers will not shift healthcare expenses to employees, such as raising deductibles or copays. Only 36% are making cost-cutting changes in 2023, down from 40% in 2022 and 47% in 2021. Overall, employers won’t increase employees’ share of the costs in 2023. Among large employers, employees will be required to pick up an average of 22% of premiums in 2023 through paycheck deductions, which is unchanged from 2022 and 2021. In a survey conducted earlier this year, Mercer found that 11% of large employers will offer employees free coverage in at least one medical plan in 2023, and another 11% are still considering it.
Behavioral Health Access
Seventy-four percent of large respondents say that improving access to behavioral health care will be a priority over the next few years. Examples of benefit enhancements include expanding EAP services and adding virtual behavioral health care options.
