Health benefit cost growth in the United States continued to outpace inflation in 2018, with smaller employers feeling the most pressure.
The Mercer National Survey of Employer-Sponsored Health Plans 2018 found that average total health benefit cost per employee rose by 3.6% for 2018, compared to 2.6% for 2017, and it is expected to rise by about 4% again in 2019. While overall cost growth remains moderate, averaging 3.3% annually over the past five years compared to 5.7% over the prior 10-year period, it continues to outpace inflation and the growth of workers’ earnings.
Small employers are having a tough time controlling costs. At companies with 10-499 employees, costs rose by 5.4% on average, while midsize and large employers with 500 or more employees held cost growth to 3.2%.
Prescription drugs – especially specialty drugs– remain a top cost driver. Among companies with 500 or more employees, overall drug benefit cost rose by about 7%, as cost for specialty drugs rose by about 12%.
Larger employers have been making investments to address underlying issues with care delivery -- and the 2018 survey results suggest they are working. They’ve taken steps to reduce specialty drug spending and added telemedicine services, Centers of Excellence, technology-based health resources and enhanced care management. These and other future-focused strategies move away from shifting cost to employees toward improving affordability, access, and outcomes. They may take more time to reduce costs than greater employee cost-sharing, but they fundamentally change how plans manage care, how providers are reimbursed, and how people care for their own health.
“Employers are very aware of the burden that high healthcare costs places on employees,” says Sharon Cunninghis, who leads Mercer’s Health business in the US. “We’re helping them implement cost-saving strategies that don’t shift expense to employees and can actually improve affordability, access and outcomes – like better clinical management of specialty drugs, preventing and properly treating opioid addiction, and steering individuals to high-quality, cost-effective providers.”