Health Insurance costs are rising and businesses are reluctant to pass premium increases to employees.
Healthcare costs are rising and many businesses are hesitant to pass those new costs on to workers.
Asset management firm Mercer is predicting health benefit costs to rise by 5.6% per employee in the next year. This rate is higher than the initial 4.4% rise formerly predicted. Despite the prices rising, businesses are not likely to pass the new cost on to employees.
“With the demand for talent and the really fierce competition for hiring the best talent, employers are wary of making cuts to benefits, because benefits make up a large portion of the package that people are considering,” says senior manager in Deloitte’s employer benefits practice, Andy Coccia.
Why it’s important
Businesses are hurting for workers, and these new price hikes for health insurance only give them two choices: to eat the cost or have employees pay it.
In January there were 11.3 million job openings in the U.S. On the last business day of July, the number and rate of job openings were little changed at 11.2 million, according to the Department of Labor’s latest Job Openings and Labor Turnover Survey.
Businesses need workers and are afraid if they spring new health insurance prices on them that they will leave. Some businesses are trying to find other health methods such as high performance networks within their health plans to help find cheaper services or telehealth services.
Backing up a bit
Rising healthcare costs isn’t exactly a new trend. Health spending hit $74.1 billion in 1970, while expenditures touched $1.4 trillion in 2000, according to an analysis from the Peterson Center on Healthcare and the Kaiser Family Foundation.
The same trend is seen in health plan costs. The average cost of an employer-sponsored health plan climbed 6.3 percent in 2021, nearly double that of the 3.4 percent uptick seen in 2020. That spike was also the largest annual cost increase since 2010, according to INC.