Employers Project 7.5% Rise in Health Care Costs for 2023

As industry experts predict that organizations should brace for increased health care costs in 2023, the International Foundation of Employee Benefit Plans launched a survey of U.S employers to identify the considerations they are contemplating for the coming year. Results show that corporate employers project a median increase of 7.5% for medical plan costs.

Causes of Cost Increases

Plan sponsors shared their thoughts on the primary reason contributing to a rise in health care costs, including the following.

  • Catastrophic claims—19%
  • Utilization due to chronic health conditions—15%
  • Utilization due to delayed preventive/elective care during the pandemic—12%
  • Medical provider costs—11%
  • Specialty/costly prescription drugs—7%

When employers were asked about health care claims in May 2021 (Employee Benefits in a COVID-19 World—One-Year Update), most noted a significant or slight decrease in employees pursuing elective procedures, preventive care, primary care appointments and emergency room visits due to the pandemic.

When discussing the results with Julie Stich, VP of Content at the International Foundation, she said that looking at the data from the last 18 months, the trend suggests that delaying routine care has resulted in poorer health and well-being, in turn leading to increased claims for both chronic and catastrophic conditions.

Managing Costs

When asked what types of initiatives would make the most impact on managing costs for 2023, employers indicated the following:

  • 24%—Purchasing/provider initiatives (e.g., telemedicine, price transparency tools, centers of excellence, health care navigators/advocates, coalitions, quality initiatives)
  • 22%—Cost-sharing initiatives (e.g., deductibles, coinsurance, copays, premium contributions)
  • 12%—Utilization control initiatives (e.g., prior authorization, case management, disease management, nurse advice lines)
  • 12%—Plan design initiatives (e.g., dependent eligibility audits, high-deductible health plans, wellness initiatives, spousal surcharges/carve-outs)

The top response includes telemedicine, which continues to grow as a popular benefit offering. An additional 9% of employers added telehealth services since the COVID-19 outbreak, according to the Employee Benefits in a COVID-19 World report.

Stich also said that it was interesting to note that employers are open to a wide range of options to best manage increased costs. The tight labor market has made many employers hesitant to increase employees’ portion of the benefit cost coverage. A combination of value solutions may be an ideal cost management technique for many organizations.

Visit www.ifebp.org/healthcarecosts for more information and a copy of the full survey results.

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