It's that time of the year again – the employer survey release season! Kaiser Family Foundation has just published its much-awaited KFF 2023 Employer Health Benefits Survey results, and major consulting firms are about to release their survey results as well. But as these findings make their way into the headlines of top media outlets, benefits leaders brace themselves for a slew of questions. It's a predictable routine: the CEO, CFO, and HR heads puzzled by the difference between these published results and their own company's statistics, seek clarifications.
Key Findings from the KFF 2023 Employer Health Benefits Survey:
1. The Upward Trend in Health Premiums
One of the most notable findings was the steep 7% increase in annual family premiums for employer-sponsored health insurance, reaching an average of $23,968. This rise comes in contrast with last year’s almost stagnant growth, signaling a marked change in the trend.
The reasons? Amongst others, the surge of inflation plays a significant role. Although inflation in the overall economy peaked in early 2022, the impact of higher wages and costs for healthcare supplies is just now showing up on healthcare premiums. We expect the impact of these higher input costs could result in high increases for several years.
Employees are now shouldering an average contribution of $6,575, marking a nearly $500 uptick from 2022. While employers bear the remainder, almost a quarter of employers anticipate upping workers’ contributions within the forthcoming two years.
Moreover, a disparity exists based on firm size. Workers in firms with fewer than 200 members are paying almost $2,500 more for family premiums than those in larger entities.
2. The Question of Deductibles
Deductibles are a critical component of the health insurance equation. On average, a worker’s annual deductible for single coverage is $1,735. Over the past decade, this average deductible value has surged by 53%. And, once again, firm size plays a role. Smaller firms often impose larger deductibles than their bigger counterparts.
We have also noted that industry and geography play a significant factor. While deductibles over $1,000 are the norm nationally in the overall workforce, we commonly see deductibles in the $250 - $500 range parts among technology firms.
3. Mental Health: A Growing Concern
While a majority of large employers believe they offer sufficient primary care access, confidence dwindles when it comes to mental health and substance use networks. Given the increasing importance of mental health in the workplace and society at large, many employers, especially the larger ones, are actively seeking ways to bolster access to mental health providers.
We now often see employers adding new vendors to broaden access to mental health services, often using technology to supplement in-person care.
Final Thoughts
The landscape of employer health benefits is in flux, influenced by legal changes, societal shifts, and economic factors. For employers, adapting to these changes is essential to remain competitive and cater to the needs of their workforce.
With almost 153 million Americans depending on employer-sponsored coverage, surveys like KFF's offer invaluable insights. As we navigate these shifts, both employers and employees must stay informed, adaptable, and proactive.
So, Why Might Your Company's Data Differ?
Over the years, I've encountered various queries from executives trying to understand these discrepancies. Here's an overview of some of the most common questions and the reasons behind the possible differences:
1. Year-over-Year (YOY) Percentage Increase
Every organization has a unique workforce and issues that impact YOY cost changes. Factors such as changes in workforce demographics, shifts in health service providers, and even alterations in company policies can result in YOY percentage changes that are unlike the broader market trends. We often see lower YOY cost increases for employers undergoing rapid growth and hiring. As growth slows and employee headcount stabilizes, the healthcare cost trends tend to increase. The impact can be even more significant for downsizing organizations. We often see higher-than-average cost trends in years surrounding layoffs or downsizing.
2. Average Cost Per Employee
Several variables come into play here, but the single most significant driver is the enrollment of dependents in your health plans. For the typical plan, coverage for employee+spouse costs 2X employee only, and family coverage costs over 3X the employee-only rate. Depending on demographics and program design, we see the percentage electing dependent coverage range from 30% to over 60% which can impact the average cost per employee by up to 40%.
3. Average Deductible
One of the most common measures of plan value is the deductible. While this can be useful in tracking trends over time and the out-of-pocket cost burden on employees, it needs to be looked at in the context of the plan design and overall approach. Some specific questions to look at:
What services does the deductible apply to? Often in HMO/EPO and PPO plans, the deductible may not apply to doctor's office visits, pharmacy, and some other routine services. In Health Savings Account qualified HDHPs, the deductible will apply to all services other than preventive.
Do you offer several options with different deductibles? To simplify the analysis, surveys often report the deductible in the highest enrollment option. If you offer multiple plans, you may have some plans well below the typical deductible and some options with higher deductibles.
Some companies might focus on low upfront costs, leading to higher deductibles, while others might opt for a more balanced approach.
In essence, while these annual surveys provide a valuable macro view of trends, it's crucial to remember that each organization's microcosm has its intricacies. So, the next time you're faced with a question about discrepancies between survey results and your company's data, use it as an opportunity to delve deeper into your organization's unique story and the factors shaping its benefits landscape.