Aon: U.S. employer healthcare costs expected to rise 6.5% next year

According to Aon (NYSE: AON), a global leader in professional services.

This projection is more than double the 3% increase in healthcare budgets that employers experienced from 2021 to 2022; but is significantly lower than the inflation figure of 9.1 reported by the consumer price index.

On average, budgeted healthcare costs for customers are $13,020 per employee in 2022. The analysis uses the company’s Health Value Initiative database, which collects information on nearly 700 U.S. employers representing approximately 5.6 million employees.

Medical claims were scrapped for most employers in the first year of the COVID-19 pandemic, a time when much care was postponed or ignored during quarantines. Employers have seen the medical claims experience return to more typical levels of growth and anticipate inflationary cost pressures in the coming year.

“In stark contrast over the past few decades, we measure that US employers’ health care budgets will be nearly three times lower than the Consumer Price Index this calendar year,” said Debbie Ashford, chief actuary. healthcare solutions for North America at Aon. . “Despite this historic event, employer healthcare costs are projected to increase by 6.5% in 2023 due to economic inflationary pressures.”

Price increases driven by economic inflation are usually slow to show up in medical trends due to the multi-year nature of the typical supplier contract, but will become apparent over the coming year, Ashford added. New technologies, the severity of catastrophic claims, blockbuster drugs and the growing share of specialty drugs are other factors contributing to increasing pressure on healthcare trends.

For 2022 health plans, costs to employers rose 3.7%, while employee premiums from paychecks were expected to see a more modest increase of 0.6% from 2021 , according to the company’s analysis. Plan costs represent the combined employer and employee premiums for medical expenses and prescription drugs, but exclude direct employee payments such as deductibles, co-payments and coinsurance. On average, employers subsidize about 81% of the cost of the plan, while employees pay the rest.

US healthcare plan cost increase from 2021 to 2022

Package cost* 2021 2022 Change
2021 to 2022
Employer cost $10,123 $10,500 +3.7%
Employee bonuses from paychecks $2,504 $2,520 +0.6%
Total package cost $12,627 $13,020 +3.1%

“In what remains a tight labor market, employers are absorbing most increases in health care costs,” Ashford said. “Employers have a higher budget due to uncertainty and the anticipation that inflationary pressures will increase the cost of health care services.”

Slight increase for employees in 2022

In 2022, employees contribute about $4,412 for health care coverage this year, of which $2,520 is paid as premiums on paychecks and $1,892 is paid through plan design features such as deductibles, copayments and coinsurance, according to the firm. analysis.

Personnel costs* 2021 2022 Change
2021 to 2022
Employee bonuses from paychecks $2,504 $2,520 +0.6%
Employee disbursements $1,798 $1,892 +5.2%
Total employee costs $4,302 $4,412 +2.6%

Improve results and costs by dealing with complex conditions

Faced with the constant upward pressure of health care trends every year, employers are exploring new solutions to reduce their health care costs. One valid approach is to address the high costs associated with patients with chronic and complex health conditions.

“The effect of chronic disease has far-reaching implications beyond what we see with healthcare costs, to other areas of business, such as absence and productivity, disability and disability. workers’ compensation,” said Farheen Dam, Aon North America Healthcare Solutions Leader. . “By focusing on chronic disease, we not only improve the health and happiness of employees, but we help improve the way they live and work.

“A key driver of rising costs and budget volatility for employers are new treatments and rising costs of care for patients managing complex long-term conditions,” Ashford added. “It’s not uncommon to see 1% of members generating 40% of healthcare spending in any given year. Aon’s business analytics capabilities can help plan sponsors identify and predict risks that may recur and worsen in the future. By integrating our expertise in the effectiveness of market solutions with our analytical capabilities, we help shape better decisions for employers and their employees through more accessible, affordable and evidence-based care.

Aon Health Value Initiative

The historical information and projections presented above were developed using Aon’s Health Value Initiative database, which captures health care costs and benefit designs for nearly 700 U.S. employers representing 5 .6 million employees and $76 billion in healthcare spending in 2022. The above projections are developed after taking into account plan design changes as well as population demographic and geographic adjustments. To learn more about Aon’s health solutions practice, visit https://www.aon.com/home/solutions/health.

*Based on the weighted average cost of customers in Aon’s analysis in 2021 and 2022.