Employers in the U.S. expect their group health plan premiums to increase, on average, between 4.7 percent and 5.2 percent in 2022, even after taking cost-management initiatives into account, according to recent employer surveys. Overall costs for health claims are also expected to rise, health insurers forecast. Higher Premiums HR consultancy Willis Towers Watson's 2021 Best Practices in Health Care Survey, based on responses from 378 U.S. employers during June and July 2021, projects a 5.2 percent premium increase in health plans next year—sharply higher than the 2.1 percent increase that occurred in 2020 and larger than 2019's 4 percent increase. Last year's premium uptick was the smallest in decades and is seen as an anomaly, as many people deferred nonemergency care and embraced telemedicine during the pandemic, Willis Towers Watson reported. In related findings:
HR consultancy Mercer's Survey of Employer-Sponsored Health Plans 2021 pegs the premium increase figure at 4.7 percent for 2022, based on 1,502 employer responses since mid-June. Employers are not expected to increase employees' share of the cost of coverage in 2022, Mercer said. On average, employees will pick up 22 percent of total health plan premium costs, unchanged from 2021. "Employers understand that health care affordability is a real issue for many employees, especially for lower-wage workers," said Tracy Watts, Mercer's national leader for health care policy. "They are looking at a range of strategies that will keep more money in
employees' paychecks and remove cost barriers when care is needed." _______________________________________________________ Health Benefit per Employee Cost, Inflation and Workers' Earning Mercer compared its survey findings with compensation and consumer price index (CPI) data from the U.S. Bureau of Labor Statistics.
†projected 2022 health cost. _______________________________________________________ Cost-Saving Measures According to Julie Stone, managing director of health and benefits at Willis Towers Watson, "rising costs and increased utilization, fueled by a resurgence in deferred care, are driving employers to find new ways to control costs while providing employees with affordable, high-quality care." Employers responding to the Willis Towers Watson survey identified measures they are taking to address affordability in the following areas:
Rising Claims Costs HR consultancy Segal recently released results from its 2022 Health Plan Cost Trend Survey of almost 80 health insurance carriers, managed care organizations, pharmacy benefit managers and third-party administrators. The survey focused on the health plan cost trend, which shows increases in per-capita claims costs, encompassing eligible billed charges from health care providers before participant cost-sharing. Claims cost, minus employee cost-sharing, are paid directly by self-insured employers. For fully insured employers, rising claims costs are reflected in future premium increases. According to Segal, the health plan cost trend has increased between 5 percent and 7 percent each year for the past 10 years, but in 2020 open-access preferred provider organizations (PPOs) and point-of-service (POS) plans reported that the actual cost trend dropped 2.1 percent, "driven by a significant drop in claim activity," said Edward Kaplan, senior vice president and national health practice leader at Segal. "We can expect that 2022 will return to pre-pandemic cost trend levels," he added. Respondents to Segal's survey project that:
Segal also found that the pandemic substantially increased the use of virtual-care visits and urgent-care facilities, which reduced emergency room (ER) visits, resulting in cost savings. The average cost of an ER visit can be close to $1,900, while a visit to an urgent-care facility is closer to $165. "We expect ER visits will continue to be down compared to previous years, as people have made a shift to using urgent-care centers, and that will continue to
save health plans money," said Eileen Flick, senior vice president and director of health technical services at Segal. "There will also be a higher use of telehealth services: It is here to stay." [Added} Aon Projects a 5% Increase in Employer's Medical Costs Consultancy Aon also released its health
plan cost forecast in October. Costs for large, self-funded U.S. employers will increase on average 5 percent to more than $13,000 per employee in 2022, Aon projects. Budgeted health care costs increased to an average of $12,792 per employee in 2021, an increase of 5.2 percent from 2020. Aon's forecast is based on health care costs and benefit designs of more than 700 large U.S. employers representing 5.6 million employees. The projections were developed after taking plan
design changes and vendor negotiations into account. Medical cost trends for health care claims "are likely to increase at a moderate rate, though COVID-19's impact adds some uncertainty for plan sponsors," the firm noted. Underlying 2022 cost trends in the U.S. are projected to increase around 6.5 percent, based on Aon's 2022 Global Medical Trend Rates Report, although many companies "will successfully manage these costs down using strategies like plan design changes, vendor oversight and chronic condition management," the firm noted. Comparing 2021 health care costs with 2020, Aon reported the following:
Employees in 2021 are contributing about $4,505 per enrollee for health care coverage this year, of which $2,482 is paid in through premiums deducted from employees' pay and $2,023 is paid through deductibles, co-pays and co-insurance.
"In a tight labor market, employers are willing to absorb most of the health care cost increases," said Ed Cwikla, Aon's chief global actuary for Health Solutions. "Employers are budgeting higher due to uncertainty and the anticipation of members facing health conditions with increased severity due to unmanaged or undiagnosed chronic conditions, 'long haul' COVID-19 patients and those with increased mental health needs." Related SHRM Article: Inflation, Other Factors, Drive Up Health Care Costs, SHRM Online, June 2021 Related SHRM Resource: 2022 Health Care Costs Projections, SHRM Express Requests What percentage of health insurance do most employers pay?An employer's contribution does not have to be the same for single employee coverage and family coverage, and often is not. When it comes to national averages, employers typically cover about 82 percent of single employee premiums and 70 percent of family premiums.
What benefits do employees value most 2022?Healthcare emerged as the leader in ranked importance by employers as the most important type of benefit that an organization can offer its workers followed by retirement and leave benefits, which ranked jointly at number two. Retirement benefits were at 55 percent in 2020/21, back up to 82 percent in 2022.
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