Willis Towers Watson: Employers expect health costs to rise by 5% in 2022

Employers expect their health costs to rise by more than 5% in 2022 as concerns about the COVID-19 pandemic linger, according to a new survey from Willis Towers Watson.

Medical and pharmacy benefit costs are expected to increase by 5.2% next year, the report found, a slight decline from the 5.5% increase projected in 2021 but significantly higher than the 2.1% increase felt in 2020 as many people deferred healthcare services during the pandemic.

Including premiums, total costs per employee are expected to increase from $12,501 in 2020 to $13,360. Employer premium contributions are also set to go up, rising from $3,269 to $3,331.

“Rising costs and increased utilization fueled by a resurgence in deferred care are driving employers to find new ways to control costs while providing employees with affordable, high-quality care,” said Julie Stone, managing director of health and benefits at Willis Towers Watson, in a statement.

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“COVID-19 accelerated both provider adoption and employee acceptance of telemedicine and virtual care. Employers see continued use of virtual care as integral to sustaining improvements made in access, quality and cost management," Stone said. "At the same time, employers must now address the Delta variant, encouraging workers to access the care and support they need while grappling with rapidly evolving conditions.”

The survey also outlines a number of solutions employers are trying to address rising costs. For example, 22% of employers currently structure benefit contributions based on pay or job grade, and 8% said they are considering those structures in the next two years.

A quarter of employers said they include surcharges for covering a working spouse, according to the survey. Another 9% said they are planning to roll out similar programs or are considering them in the next two years.

Other popular strategies center around provider networks and centers of excellence, the survey found. Currently, 21% said they offer narrow networks focused on high-quality providers, but 30% said they are planning to adopt this strategy or are considering it in the coming years.

In addition, nearly half (48%) said they currently offer centers of excellence within their health plans, and 23% are considering or planning to add them to their network offerings, the survey found.

Other options employers are weighing include enhanced care management services such as concierge programs, on-site services and telehealth. Thirty-one percent currently offer concierge services, and 25% are planning or considering them.

More than half (55%) said they offer on-site health promotions, and 17% are planning to add or considering them. Just 13% said they have medication adherence programs in place, but nearly 30% are planning or considering them.