The Shocking Average Employer Health Insurance Cost: What You Need to Know

With shocking – and continuous – rising healthcare costs, staying on budget while still finding ways to offer attractive, quality benefits packages takes incredible time and effort. It’s important to look at what’s causing healthcare costs to rise if HR professionals hope to reduce the total cost of care in the long run.

So, what factors are driving up the cost of healthcare? What impact does this have on your organization? And most importantly – what are strategies you can implement to reduce healthcare costs? 

We're exploring all of these questions and more here – so keep reading if you want insight into how the rising average employer healthcare insurance cost is affecting business today.

• $7,911 for single coverage (similar to 2021 data, $7739)

• $22,463 for family coverage (equivalent to 2021 data, $22,221)

The average family plan in 2023 is approaching $23k (and rising!)

Kaiser Family Foundation's Employer Health Benefits Survey 2022 report shows that the average annual premiums for employer-sponsored health insurance in 2022 were:

Organizations of any size, in any industry, can struggle to keep up with their portion of the cost to offer employees healthcare.

How much does employer health insurance cost on average in 2023?

According to estimates from The Kaiser Family Foundation's Employer Health Benefits Survey 2022 report, family premiums increased 20% over the last 5 years, and a whopping 43% over the last 10. With continued inflation, which is growing at a rapid pace, the survey forecasts a continued sharp increase in premiums in coming years.

The trend of escalating healthcare costs is anticipated to remain in place for the foreseeable future. Experts suggest yearly increases will range anywhere from 4 - 7%. This means that by 2030, organizations can expect healthcare expenses to be a whopping 10 - 20% higher than they are today, depending on their industry sector.

What factors impact the average employer health insurance cost?

Expenses in the healthcare sector are escalating at an alarming rate, and several elements play a role in this upturn. The truth is, healthcare costs have been on the rise for years. The culprits? We broke down the main reasons for rising healthcare costs for you here:

• An aging population:  As people live longer, they require more medical care, increasing healthcare costs for everyone.

• Insurers: Insurers contribute to the mounting healthcare costs through higher premiums, partly due to an absence of rivalry among providers or to recoup any deficits incurred during prior years when claims outstripped expectations.

• Advances in technology and treatments: Great advancements in the medical field – both in detection and in treatments – have made it possible to diagnose and treat conditions that were previously untreatable or difficult to detect.

• Administrative complexity: Hospitals must pay those who handle paperwork related to billing and coding services provided by physicians or other medical professionals. The complexity of these processes can lead to errors that result in additional charges being passed onto patients or employers who offer health insurance coverage for their employees. In short, complex processes add extra burden and room for error on providers, resulting in higher prices charged by insurers or employers. 

• Lack of price transparency: A general lack of transparency makes it increasingly difficult for consumers or employers to compare prices.

• Prescription drug pricing: Pharmaceutical firms often levy hefty costs for their drugs due to the high expenses involved in developing novel treatments and remedies. Cost is then further driven up by these pharmaceutical companies as they set their prices without competition from generic drugs is yet another factor. 

• Government regulations: Oversight and regulations that increase provider compliance requirements add additional overhead expenses.  

What impact do high healthcare costs have on organizations?

High medical expenses not only affect worker health and morale but also strain organizational budgets. The cost of healthcare has financial and non-financial impacts, both of which are detrimental to the longevity and overall success of any business, in any industry, across the board. 

Financial implications – Increased and unpredictable premium payments for organizations are just half the issue. There’s also a concern over decreased profits from lower revenues generated due to fewer sales – consumers can't afford goods or services after paying their own medical bills. 

Non-financial impacts – Include reduced productivity due to multiple factors. For example, a spike in absenteeism might be due to chronic conditions or mental health issues, that weren't treated because of unaffordable treatment options or a lack of access to quality care. Or low job satisfaction from employees who feel their organization doesn't value their well-being enough to offer adequate medical insurance coverage. Then there's the challenge of recruiting top talent since potential candidates prefer working with organizations that provide stellar benefit packages and offer a happy and healthy work culture. Each of these can cause a culminating negative overall impact on business operations.

How can employers reduce healthcare costs?

Anyone tasked with providing their organization with the best possible benefits package knows unequivocally that healthcare costs are a significant expense. So how do you reduce those costs while still offering quality care? Fortunately, several strategies can help. 

• Negotiate better terms – Look at ways to negotiate lower prices with providers, like reducing administrative fees or bundling services together, so you can receive discounts based on volume purchases.

• Utilize advanced primary care – Advanced Primary Care (APC) offers employees comprehensive primary care services and specialized care – like mental healthcare – with little to no copays or deductibles at a fraction of traditional plan premiums. Your employees can get up to 90% of their medical services through the APC model. 

• Give employees autonomy in their own care – If employees can afford to take care of themselves, it saves you money in the long run. By having access to affordable, convenient care, employees are more likely to actually see a doctor, get a diagnosis, and receive treatment, before their health deteriorates further and cost increases. 

• Chronic illness management – When chronic illnesses are effectively managed, employees will miss less work and be more productive on the job, saving employers money. 

• Offer wellness programs – Wellness programs provide incentives, like gym memberships or discounted healthy meals, to encourage healthier lifestyles amongst employees.

• Increase transparency around pricing – By educating those in your organization about how much specific procedures, treatments, and services cost, you may find them more likely to shop around for cheaper alternatives, thus helping keep your overall expenses down.

• Leverage technology – Use digital tools like telemedicine platforms so employees don't need to travel long distances just to get basic medical advice, saving time and money.

• Provide preventive wellness programs & screenings – Reduce healthcare costs by providing preventive wellness programs and screenings. These programs help identify potential health issues before they become serious problems, allowing employees to take steps toward improving their overall health. In addition, providing free or reduced-cost preventative treatments – like flu immunizations and cholesterol checks – can help control costs in the long run by avoiding more expensive medical needs later.

• Negotiate reduced costs for prescription plans – As a cost-saving measure, negotiate to reduce prices for prescription plans with pharmaceutical companies or pharmacy benefit managers (PBMs). Implement a formulary system that limits what drugs will be covered based on efficacy and cost-effectiveness to ensure only necessary medications are being prescribed while keeping drug prices low.

• Offer clinical care management for chronic illness – For people living with chronic illnesses, clinical care management can effectively reduce healthcare spending. Clinical care management involves having a team of professionals coordinate patient care across multiple providers. The care model drastically improves outcomes and reduces unnecessary tests or procedures that drive up medical bills. It also allows patients to receive comprehensive treatment without breaking the bank.

Benefits of offering Advanced Primary Care as an add-on option

Advanced Primary Care (APC) — What is Advanced Primary Care (APC)? APC is a more comprehensive approach to the Direct Primary Care (DPC) model, which offers another option for reducing employer-sponsored healthcare costs year over year by using a flat-rate per month cost to manage healthcare expenses. APC can provide even greater savings opportunities through a focus on preventive care, rather than treating existing illnesses after they occur. APC utilizes data analytics tools combined with dedicated providers and patient input in order to detect potential health issues before they develop into serious and chronic medical problems, thus saving both time and money over traditional methods used by insurers today.

And in addition to saving money on premiums, APC also cuts administrative paperwork associated with filing claims, since all payments go directly between employer/union and provider, making it easier than ever before for both parties involved.

These tactics mean organizations can considerably curb the mounting costs of healthcare year over year while still affording quality insurance plans. This ensures that everyone has access to the care they need now and in the future years ahead.

Reduce healthcare costs with Marathon’s APC solution

As employers grapple with the ever-increasing cost of health insurance, it’s important that HR professionals understand what’s driving these prices up, and how they can be brought down. The average employer health insurance cost in 2023 is expected to be higher than ever before, but there are ways for organizations to mitigate this expense. With a proactive approach towards managing healthcare expenses, it’s easier to ensure the budget remains healthy and employees receive the best possible care.

Looking for help reducing the cost of health insurance? Marathon Health is the solution you’ve been seeking. By partnering with us, you can save money on employee benefits while ensuring your employees receive top-notch medical attention. 

Sources:

https://www.kff.org/report-section/ehbs-2022-summary-of-findings/

https://www.bls.gov/regions/mid-atlantic/data/consumerpriceindexhistorical1967base_us_table.htm