Employee Benefits Market Check Survey: 2023 Medical Cost Increase

As 2022 draws to a close, employers are putting the finishing touches on their employee benefit offerings for next year. After a couple of years of reduced utilization of medical services due to the pandemic, 2022 was a rebound year in terms of the volume of care. That, coupled with increased inflation, had many plan sponsors concerned with their medical renewal costs for 2023. While employers have different levers to pull to offset cost increases, such as changing plan designs or insurance carriers, the tight labor market makes some of these strategies unpalatable.

We conducted a poll during a webcast on December 15 to determine the final cost impacts for employers. The results are in the charts below.

After all changes to plan, carrier and network, what was your
company’s final medical increase for 2023?

Key Findings
While the spike in medical services is directly impacting the higher cost increases for 2023, other factors are playing a role:

• Greater frequency of high-dollar claims
• Increase in mental health condition
• Increase in provider unit cost as a result of high inflation
• Labor shortage and consolidation within the healthcare industry
• Additional costs due to long-term COVID-19

With almost half of all respondents (46%) absorbing an increase of at least 7%, it is clear that cost pressures are once again at the forefront of employers’ minds. All early indicators show that cost increases may also be nas high in 2024. Companies will be challenged to keep their benefit offering affordable for their workforce while not negatively impacting their own budget. It will be critical for employers to analyze their claim data, review their insurer and pharmacy contracts, innovate their plan design, and explore additional health management solutions to manage the cost curve.

Should you have any questions or are interested in any industry-specific data, please contact your local Assurex Global adviser.