Businesses Aim To Control Health Care Costs in 2023

Many business owners plan to prioritize controlling rising health care benefits costs for their employees over the coming years. Many owners expect costs to continue to rise in the coming years and are looking to pursue different avenues for controlling these costs for their employees.

A new survey by consultancy WTW found that U.S. employers project their health care costs will jump 6 percent next year compared with the average 5 percent increase they are experiencing this year. Over half of respondents (54 percent) expect their costs will be over budget this year.

A total of 445 U.S. employers participated in the 2022 Best Practices in Health Care Survey, conducted in August. Respondents employ 8.2 million workers.

“With no end in sight to projected cost increases, the need to manage health care costs and address employee affordability has never been greater,” said Courtney Stubblefield, insights and solutions leader, health and benefits, at WTW. “Yet, with so many potential actions, employers must focus on changes that go beyond addressing their employees’ needs to also support efforts to attract and retain talent during a tight labor market.”

So what can be done?

Here is some of the actions employers are taking:
  • Health plan budget boosts.

    2 in 10 employers (20 percent) added dollars to their health care plan without reallocating funds from other benefits or pay. Another 30 percent expect to do so in the next two years.
  • Defined contributions.

    Four in 10 employers (41 percent) reported using a defined contribution strategy with a fixed dollar amount provided to all employees that differs by employee tier. Another 11 percent are planning or considering doing so in the next two years.
  • Evaluations of employee contributions by income.

    The number of employers that examine employee health payroll contributions as a percent of total compensation or income as the basis for benefits design decisions is expected to more than double from 13 percent this year to 32 percent in the next two years.
  • Contribution banding.

    More than a quarter (28 percent) structured payroll contributions to reduce costs for targeted groups, such as low-wage employees, or by job class. Another 13 percent are planning or considering doing so in the next two years.
  • Low-deductible plan.

    Three out of 10 (32 percent) offered a plan with low member cost sharing (e.g., no more than a $500 deductible for a single preferred provider organization plan) this year; another 7 percent are planning or considering doing so in the next two years.
  • Fraud, waste and abuse programs.

    A quarter of respondents (27 percent) used programs to combat fraud, waste and abuse. Another 22 percent expect to do so by 2024.
  • Out-of-pocket costs.

    Nearly a quarter (23 percent) implemented higher out-of-pocket costs for use of less efficient services or site of service, such as the use of nonpreferred labs or high-cost facilities for imaging, or respondents mandated the use of high-quality, cost-effective centers of excellence for medical care. Another 19 percent are planning or considering doing so by 2024.
  • Concierge navigation.

    Two in 10 (21 percent) offered concierge navigation even if it requires movement from a full-service health plan to a third-party administrator. Another 25 percent are planning or considering doing so by 2024.
  • Voluntary benefits.

    Over a third of respondents (35 percent) added or enhanced voluntary benefits such as supplemental health insurance (e.g., additional hospital coverage, cancer coverage, disability income replacement) in case of a catastrophic event. Another 27 percent are planning or considering doing so by 2024.
“Employers that act now to predict, plan and implement solutions and strategies that balance employee affordability objectives with escalating prices can avoid having to take desperate measures in a rising health care cost environment,” said Tim Stawicki, chief actuary, health and benefits, at WTW.

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