Employer-sponsored health costs to rise 5.4% in 2023: Mercer

Employer-sponsored health costs rose 3.2 percent on average in 2022 and are expected to rise 5.4 percent in 2023, according to a Dec. 8 Mercer survey

Mercer's survey included responses from over 2,000 public and private employers in 2022 that employ about 124 million full- and part-time employees.

In 2022, average per-employee costs have risen to $15,013, with smaller companies (50+ employees) reporting slightly higher costs than large companies (500+ employees). 

In 2021, employer-sponsored health costs rose 6.3 percent on average. Mercer noted that this year's rate increase is below general inflation, which averaged around 8 percent this year. Because health benefit costs are usually higher than inflation, Mercer predicts larger inflationary effects in the next few years.

"In the healthcare sector, higher wages, labor shortages, and consolidation will almost certainly result in higher prices," Mercer's Chief Health Actuary Sunit Patel said. "One reason cost growth lagged inflation this year is because healthcare providers typically have multi-year contracts with health plans. So although employers did not feel the full brunt of inflation immediately, it's very likely that inflation-driven cost increases will phase in over the next few years as contracts are renewed."

Top strategic priorities for employer benefits programs: 84 percent of large employers are enhancing benefits to improve attraction and retention, 73 percent are expanding behavioral health benefits, and 68 percent are prioritizing better affordability.

Among very large employers (20,000+ employees), 53 percent say sending employees to high-performing provider networks is a key strategy for them, 36 percent offer a telephone navigation service, and 17 percent offer digital navigation.

Large employers said specialty drug spending increased by nearly 10 percent in 2022, 34 percent say they will add or enhance stop-loss protection for an expected increase in large claims, and about 25 percent said they will work with their insurer and PBM on cost management strategies.

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