National Survey of Employer-Sponsored Health Plans

Accelerating health benefit cost growth is driving program strategies

Following a jump in health benefit cost this year and potentially higher increases ahead, employers are putting cost management front and center. However, with healthcare affordability a concern, especially for low-wage workers, employers are pursuing strategies that don’t shift cost to employees, like steering patients to higher-quality care and providing more intensive care management.

Inflation catches up with healthcare

The average per-employee cost of employer-sponsored health insurance rose by 5.2% in 2023 to reach $15,797, and employers project another sharp increase for 2024. Because healthcare providers typically have multi-year contracts with health plans, inflation-driven cost increases are phasing in as contracts are renewed.
Challenges for small employers

Cost increases were highest for small employers, who also reported a higher average per-employee cost for health insurance -- $16,464 compared to $15,640 among large employers. Large employers are able to self-fund their medical plans, avoiding insurance company risk charges, and typically also have more resources to devote to health program management.
Rx plays a part

Medical breakthroughs have made drugs the fastest-growing component of plan cost for years, and in 2023 pharmacy benefit cost jumped 8.4%. New and ongoing developments in the pharmaceutical market seem likely to have a long-term impact on health benefit cost.
Keeping healthcare affordable

Despite rising health plan costs, large employers largely avoided shifting additional costs to employees through higher deductibles or OOP maximums in 2023. Some are providing medical plan choices to accommodate different financial and medical situations, for example, a plan option with free employee-only coverage, or one with no deductible.

Explore the 2023 findings

Health benefit cost per employee rose 5.2% in 2023
Change in total health benefit cost per employee compared to CPI

Annual change in total health benefit cost per employee:

2004 7.5%

2005 6.1%

2006 6.1%

2007 6.1%

2008 6.3%

2009 5.5%

2010 6.9%

2011 6.1%

2012 4.1%

2013 2.1%

2014 3.9%

2015 3.8%

2016 2.4%

2017 2.6%

2018 3.6%

2019 3.0%

2020 3.4%

2021 6.3%

2022 3.2%

2023 5.2%

Overall inflation

Beginning in 2020, survey results are based on employers with 50 or more employees. *Projected.

Source: Mercer's National Survey of Employer-Sponsored Health Plans, Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation, 1993-2023 (April)

Mercer National Survey of Employer-Sponsored Health Plans

Small employers hit with 7.8% increase in 2023, pushing cost well above $16,000 per employee

Average total health benefit cost per employee

All employers (50 or more employees)
2022 $15,013
2023 $15,797
+5.2%

Employers with 50-499 employees
2022 $15,278
2023 $16,464
+7.8%

Employers with 500 or more employees
2022 $14,948
2023 $15,640
+4.6%

Mercer National Survey of Employer-Sponsored Health Plans

Prescription drug cost is driving overall health benefit cost
Average annual change in cost per employee

2019
Prescription drug cost 4.9%
Total health benefit cost 3.0%

2020
Prescription drug cost 6.4%
Total health benefit cost 3.4%

2021
Prescription drug cost 7.1%
Total health benefit cost 6.3%

2022
Prescription drug cost 6.4%
Total health benefit cost 3.2%

2023
Prescription drug cost 8.4%
Total health benefit cost 5.2%

Mercer National Survey of Employer-Sponsored Health Plans

Boosting affordability
Employers with 500 or more employees

Helping employees keep more of their paychecks

15% Offer free employee-ony coverage in at least one medical plan

17% Use salary-based contributions

Removing financial barriers to seek care

39% Offer medical plan with no/low deductible (e.g., copay plan)

Providing cash to help pay for healthcare

6% Make larger HSA contributions to low-earners

Mercer National Survey of Employer-Sponsored Health Plans

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