The cost of employer-sponsored health insurance has risen sharply in 2021, prospects for 2022 are uncertain
NEW YORK–(COMMERCIAL THREAD) – The average cost per employee of employer-sponsored health insurance jumped 6.3% in 2021 as employees and their families resumed care after avoiding it last year due to the pandemic, according to Mercer 2021 National Survey on Employer-Sponsored Health Insurance Plans, released today. With the largest annual increase since 2010, the cost of health benefits outpaced the growth in inflation and workers’ incomes through September, raising the question of whether employers are seeing a temporary correction in the trend. costs (after increasing only 3.4% from last year), or the start of a new period of higher cost growth.
Employers expect – on average – a fairly typical cost increase of 4.4% for the coming year. “Employers seem optimistic that this year’s sharp increase is simply the result of people returning to care,” said Mercer’s chief actuary Sunit Patel. However, he cautions that there are a number of factors that could cause cost growth to continue to accelerate. “Topping the list of concerns is higher utilization due to ‘catch-up’ care, lengthy COVID claims, extremely expensive genetic and cell drug therapies, and possible inflation in healthcare prices,” he said. -he declares.
Cost growth was most pronounced among small employers (50 to 499 employees), at 9.6%, while large employers reported average cost growth of 5.0%. Small employers are more likely to offer fully insured health plans, suggesting that insurance companies expected significantly higher costs in 2021 compared to 2020.
Additionally, prescription drug spending increased 7.4% in 2021 among large employers (those with 500 or more employees), due to an 11.1% increase in specialty drug spending. .
Transfer of employee costs ends in 2021
When the growth in health benefit costs accelerates, employers typically step up their cost management efforts to keep the increases at sustainable levels. However, a traditional cost management tool known as “cost shifting” – where employers shift a larger share of health care costs to plan members – seems to be irrelevant to many employers.
In fact, concerns about the affordability of health care for low-wage workers, as well as the need to retain and attract employees in a competitive job market, have led to an unexpected reversal in some labor sharing trends. health plan costs. Most employers have not only delayed increasing deductibles and other cost-sharing arrangements, but some have even made changes to reduce employee out-of-pocket expenses for health services. Among small employers (50 to 499 employees), the median deductible for individual coverage in a PPO increased from $ 1,000 to $ 900 in 2021. Among large employers, the median individual deductible in an HSA-eligible plan is increased from $ 2,000 to $ 1,850 in 2021.
Nationally, 40% of all covered employees signed up for a consumer-driven high-deductible plan in 2021, up from 38% in 2020. However, most large employers who offer a CDHP on their largest Worksite (86%) also offer employees another plan choice with a lower deductible.
Additionally, large employers did not significantly increase employee contributions in 2021. Average monthly payroll deduction only increased by $ 7 for employee-only coverage (from $ 160 to 167 $) and only $ 12 for family coverage ($ 590 to $ 602) in PPO plans. , the most common type of medical coverage offered.
Prioritize support for employees
Benefit priorities have shifted in response to the impact of the pandemic on the workforce and the changing landscape of benefits. Many employers view supporting the mental, emotional and behavioral health of employees as a business imperative. According to survey results, adding or expanding programs to increase access to behavioral health care is a priority for all large employers (74% rated it as important or very important) – and it is the number one priority for employers of 20,000 people or more. employees (86% rated it as important or very important).
“In today’s extremely tight labor market, generous health benefits can help tip the balance in attracting and retaining staff,” says Tracy Watts, US national health policy manager at Mercer. “Beyond that, in the wake of the pandemic, many employers are committed to helping end health disparities, and ensuring that care is affordable for all of their workforce. ‘work is an important part of it. ”
The survey found that nearly half of all large employers – and about two-thirds of those with 20,000 employees – say that health equity and the social determinants of health will be a high priority over the years. Next 3 to 5 years.
Manage the cost of health benefits without passing costs on to employees
By 2022, the majority of plan sponsors (60%) say they will not make any changes to the plan to reduce the expected increase in costs. This is largely due to the fact that employers are focusing their attention on improving benefits to support employees and stay competitive in a tight labor market, but the sharp rise in costs suggests a need to prioritize how they will manage them. costs.
“The difficult challenge of solving both the cost of health care and the affordability of health care means maximizing value and accepting the disruption that can cause,” says Watts. “Quality, delivery and personalization are three key elements of value. ”
Focus on quality During the disruption of the healthcare system over the past two years, employers have been less able to pursue quality initiatives that seek to refer members to high performing providers, such as centers of excellence and clinics. responsible care organizations (ACO). Ms Watts suggests employers need to resume these efforts, but with a new emphasis on convenience.
“Value starts with quality suppliers performing well, but convenience has to be part of the equation, along with affinity. People want to receive their care through the channels they are most comfortable with, and that isn’t always a doctor’s office. It can be a pharmacy, retail or online.
Balance virtual and in-person caregiving Convenience is a major benefit of virtual health care, which can also be used to improve access without increasing costs. Employees are more open to virtual care than ever before. With in-person health care severely limited at the worst of the pandemic, telemedicine has clearly received a boost: utilization rates have stagnated at 9% or less among large employers for many years; it jumped to 15% in 2020 and held steady at 12% in the first half of 2021.
However, virtual care also encompasses a wide range of digital health solutions that do not rely solely on real-time interactions with a live healthcare professional. Targeted health solutions that address specific health issues like diabetes or musculoskeletal disorders are now offered by 25% of all large employers and 20% are considering adding them. Such programs can save both employer and employee money by substituting home care – for example, online physical therapy – for in-person visits. A network or virtual service of primary care physicians (PCP) is offered by 16% of large employers, of which 10% are considering. And 28% of all large employers (and 43% of those with 20,000 or more employees) offer a virtual behavioral health care network.
Customize benefits to maximize value for individuals Digital health solutions can be an affordable way for employers to add variety to their offerings and allow employees to customize their benefits to maximize value for them. For example, while only a small portion of the workforce can use a fertility program, it could have a big impact on their lives; the same is true of online resources for parents of children with autism, or benefits for the treatment of gender dysphoria.
And, adds Ms. Watts, “In today’s environment of diverse work situations, employers see this type of personalization as a way to ‘equalize’ the benefits available to on-site, remote and hybrid workers. Nearly one in five employers who expect more employees to work remotely (18%) say they added voluntary benefits specifically for this reason. The prevalence of pet insurance, legal benefits, student loan repayments, and identity theft programs all increased in 2021.
Mercer’s National Survey of Employer-Sponsored Medicare Plans included 1,745 public and private employers in 2021. Based on the responses of a subset of employers in a national probability sample in combination with a non-probability sample, the survey results were weighted (using the Employer Size and Geographic Stratification) to represent the approximately 184,000 employer-sponsored health plans across the United States with 50 or more employees. These organizations employ approximately 118 million full-time and part-time employees.
The full report on the Mercer survey, including a separate appendix of response tables broken down by employer size, region and industry, will be released in March 2022. For more information, visit www.mercer.com/health-benefit-trends.
Mercier believes in building a better future by redefining the world of work, reshaping retirement and investing outcomes, and unleashing true health and wellness. Mercer’s approximately 25,000 employees are based in 43 countries and the company has operations in 130 countries. Mercer is a company of Marsh mclennan (NYSE: MMC), a global leader in professional services in the areas of risk, strategy and human resources, with 81,000 colleagues and annual revenues of more than $ 19 billion. Thanks to its leading companies in the market, including Marsh, Guy Charpentier and Olivier Wyman, Marsh McLennan helps clients navigate an increasingly dynamic and complex environment. For more information visit mercer.com. Follow Mercer on LinkedIn and Twitter.