Employers are bracing for 2024, fearing they’ll face inflation and soaring healthcare costs while still trying to recruit and retain workers in a tight labor market, a new survey shows.
While about half of employers say they may shift a small portion of their healthcare costs to workers, only 3% will shift enough cost through plan design to shield themselves from increased costs. In addition, 45% said that they will not increase cost-sharing at all, according to a Mercer survey.
The average per-employee cost of health insurance rose by 3.2% in 2022, only about half the rate of general inflation at 6.5%, according to Mercer. Healthcare costs usually rise higher than the consumer price index.
However, because provider contracts are often for three years, employers last year were spared steep cost increases to cover their employees, according to the report.
"We can expect that wage increases and higher supply costs in the healthcare sector will result in higher prices over the next few years as provider contracts are renewed," the Mercer analysts wrote. "Employers projected an average cost increase of 5.4% for 2023, and we should be prepared for continued accelerated cost growth in 2024 and beyond.”
Employers want to ensure decent healthcare coverage for their workers without shifting costs through higher deductibles, copayments, or out-of-pocket limits, noting that “the labor market is still very tight in many industries and HR needs to pull all levers—including health benefits—to attract and retain employees,” according to the survey.
Employers realize that workers in high-deductible health plans might have little or no savings to deal with an unexpected or chronic health problem.
“Well over a third of employers offer a plan with little cost sharing when care is needed, such as a co-pay based plan,” the survey said. “Finally, to make a high-deductible plan more manageable, some employers are providing larger HSA contributions to employees who earn less.”
Mercer surveyed 721 employers ranging from small, or fewer than 500 employees; medium, between 500 to 4,999 employees; and large, with over 5,000. Fifteen percent of large employers are offering free employee-only coverage in at least one medical plan, up from 11% last year.
The survey states that employers are moving “quickly” to enhance reproductive care, with 46% saying they want to do so in 2024, up from 37% in 2023.
“The percentage planning to offer menopause support has more than tripled since last year’s survey,” the survey said.
Employers also want to reassess their time-off policies to give employees more flexibility.
“Of the employers responding to the survey, about a fourth—27%—offer unlimited PTO to at least some employees, although only 6% offer it to all employees,” the survey said. “It seems that this policy is continuing to slowly gain traction even in the post-pandemic era.”
They also want to find ways to better support the behavioral health of workers, especially with stress on the rise amid economic uncertainty, climate change and other concerns.
“The level of job-related stress, depression/anxiety and financial stress among workers are each considered a concern or serious concern by a majority of employers,” the survey states.