Employer Health Care Costs Will Spike Less Than Inflation

Insurance costs were muted during 2020, the first year of the COVID-19 pandemic, but they will return to rise at ‘more typical levels,’ research shows.

Average health care costs for U.S. employers are expected to increase in 2023 at a slower rate than inflation, according to Aon research.

Aon data show that average costs for U.S. employers that pay for their employees’ health plans will increase 6.5% in 2023, to more than $13,800 per employee. The projected figure is less than the 9.1% inflation level over the 12 months through June, according to Consumer Price Index data from the Bureau of Labor Statistics.

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Aon’s forecast is more than double the 3.7% increase to health care budgets which employers experienced from 2021 to 2022, according to historical data and numbers from the firm’s Health Value Initiative database. Costs for employees were projected to rise 0.6% in the same period, the research shows.

U.S. health care plan costs from 2021 to 2022 increased 3.1%, to $13,020 from $12,627, according to Aon’s Health Value Initiative. Average employer costs rose 3.7%, to $10,500 from $10,123.

Aon’s data show that for most employers, medical claims were lower during the first year of the COVID-19 pandemic because many workers skipped or postponed medical care while under quarantine.

The new data show that for employers, medical claims will “return to more typical levels of growth and anticipate inflationary cost pressures in the coming year,” an Aon news release says.

Research also shows an increase in average costs for employees in 2022. Total employee costs for health care increased 2.6% from 2021, rising to $4,412 from $4,302; employee out-of-pocket costs extended 5.2% to $1,892 in 2022, from $1,798 in 2021; and employee premiums from paychecks grew 0.6% to $2,520 from $2,504.  

Aon’s Health Value Initiative includes information from nearly 700 U.S. employers representing approximately 5.6 million employees. The Aon database was launched in 1996 to captures health care cost and benefit data for employer clients, says a spokesperson. 

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