U.S. employers balance controlling healthcare costs with boosting affordability and enhancing mental health programs
Employers are bracing for a higher-cost environment as rampant inflation and market forces fuel a projected rise in healthcare costs of 6% for 2023 (Figure 1). This is a one-percentage-point hike over the 5% increase expected in 2022 and higher than 2022’s wage growth of 5.3%.
Findings from our 2022 Best Practices in Healthcare Survey suggest we are entering a period of sustained cost increases. Seven in 10 employers anticipate moderate to significant increases in healthcare costs over the next three years.
Budgeting can become challenging in these circumstances. Over half of respondents (54%) expect their costs will be over budget in 2022. Fewer than a fifth (15%) expect their costs to be at budget.
In this higher-cost environment, over two-thirds of employers (67%) plan to prioritize managing their organization’s healthcare plan costs over the next three years (Figure 2).
But, at the same time, employers understand that to attract, engage and retain talent in today’s tight labor market, it is important to offer benefits that are affordable and competitive. Accordingly, employers rank employee affordability as a key priority, especially as it applies to lower-wage workers.
Additionally, many employers are looking to strengthen their employee health and wellbeing programs. Given the toll the pandemic has taken on employees’ emotional health, employers ranked enhancing mental health and emotional wellbeing programs as their top priority along with managing costs.
Employers also recognize the urgency of meeting the needs of a diverse workforce, addressing the many social factors that influence health and treating all workers in an equitable and inclusive manner. With this in mind, over half of survey respondents (52%) indicate they plan to prioritize adding or enhancing diversity, equity and inclusion in health and wellbeing benefits.
Managing these competing priorities requires planning ahead to identify high-impact opportunities to mitigate costs, improve affordability, and strengthen health and wellbeing programs.
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A total of 455 U.S. employers participated in the 2022 Best Practices in Healthcare Survey, which was conducted in August 2022. Respondents employ 8.2 million workers.
Percentage of enrolled employees (average)
19% Fully insured medical plans
81% Self-insured medical plans