Employers' health benefit costs are set to rise by 6.5% in 2020, outpacing inflation but at a slower rate than growth globally, according to a new report.
A new report from Aon shows that global employer health benefit costs are set to rise by 8%, beating the projected 2020 inflation rate of 3.8%. The report, which surveyed 105 Aon offices each representing a unique country, attributes that trend to an expansion of benefits and slightly higher inflation.
The increase in the U.S. is stable compared to 2019, according to the report. However, experts at Aon warn that this isn’t necessarily a good thing—the rising cost of healthcare is still untenable.
“We’re still creating a spread, and that makes the healthcare costs feel like we’re continuing on a difficult-to-sustain path,” Will Sneden, U.S. health and benefits practice leader at Aon, told FierceHealthcare.
Employers’ concern about the rising cost of healthcare—and thus the rising cost of benefits—has pushed some to take on “activist” role in the industry to advocate for change. This is coupled with a move away from continued cost shifting to employees, recent survey data from the National Business Group on Health show.
The main factors contributing to employers’ rising costs in the U.S. are costly specialty drugs, moderate increases for the price of care and flat or declining service use, according to the report.
Sneden said employers are looking to options such as enhanced wellness benefits, potentially narrowing networks to focus on high-quality providers and more closely scrutinizing benefit design.
He said how employers approach provider networks will be a trend to watch over the next several years. “There’s a lot more interest among the employer-sponsored programs in looking at those different types of network structures,” he said, “and maybe a willingness to consider a tighter network of higher-value providers.”
The report also examines how health coverage providers are reacting to the rising cost of care globally. Most countries included in the survey (88%) said they’re looking to wellness initiatives, while 78% said they’re trying cost containment programs.
Less popular solutions included access and delivery restrictions (56%), plan design changes (54%) and offering flexible benefit plans to cap costs (40%).