More on Budgeting

Healthcare costs for employers are coming in below projections, survey finds

With benefits costs expected to climb 5% in 2020, employers are engaging in efforts to stem the increases.

Jeff Lagasse, Associate Editor

Employers are projecting that the total cost of health benefits will increase about 5% in 2020, and so far that's consistent with the projections for this year, which also were estimated to be 5%. But it appears as though costs are coming in lower than anticipated.

A new survey from the National Business Group on Health found that the actual cost increase in 2018 was 3.6 percent. When premiums and out-of-pocket costs for employees and dependents are taken into account, total healthcare costs are estimated at $14,642 per employee. That's expected to rise to $15,375 next year.

About 70% of the costs will be borne by employers, and employees will take on the remaining 30% -- totaling about $4,500.

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A number of health conditions are impacting employers' healthcare costs. Musculoskeletal issues were chief among them, with 44% of respondents saying it's the top issue and 85% ranking it in the top three. Another 25 percent said cancer was the condition most impactful to their costs.

Perhaps because of that, there remains high interest in things like accountable care organizations are high-performance networks -- about 31% of employers plan to pursue one or both alternative payment and delivery models next year, a trend that's only increasing. By 22 percent, the survey projects that number could swell to 60%.

Meanwhile, almost half of respondents are eyeing an advanced primary care strategy in 2020. By 2022, an additional 26% may consider one.

Another strategy being heavily considered by almost all survey respondents is telehealth. By next year, almost all of them will offer some form of virtual care for minor health issues, and the vast majority, 82%, are also considering it for mental health treatment. By 2022, an estimated 95% will likely offer some form of virtual mental health care offering.

Those numbers are unsurprising in a sense because the percentage of employers who view virtual care as having a significant role in future care delivery is growing. Prior to this year, about 52% considered it a significant strategy. As 2020 looms, that number has increased to 64%.

In addition to virtual care, 39% said they would focus on high-cost claims as a top initiative for 2020.


A September report from Aon paints a more challenging picture for employers. That analysis found employer-provided medical benefit costs are forecast to rise 6.5% in 2020, outpacing general inflation by 3.8%.

The increase for U.S. employer-sponsored medical plans expected next year is due to a combination of higher costs for specialty drugs, moderate price increases for care and flat or decreasing health utilization.

Medical costs in the U.S. will rise more slowly compared to other regions around the world. Globally, costs for employer-sponsored medical plans in 2020 are forecasted to increase 8%, up from 7.8% growth this year. This is mainly due to expanded benefits and a slight increase anticipated in general inflation.

Twitter: @JELagasse

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