Employer Healthcare Costs Set to Increase to $13.8K per Employee in 2023

Medical claims are back on the rise after being supressed during the early stages of the COVID-19 pandemic.

Healthcare costs for employers are set to increase to more than $13,800 per employee in 2023, according to analysis by Aon.

The financial services firm used data of nearly 700 employers representing approximately 5.6 million employees and found that healthcare expenditures will rise significantly from the budgeted $13,020 per employee in 2022.

The projection of a 6.5% increase is more than double the rate employers experienced from 2021 to 2022, but remains well below the 9.1 inflation figure reported through the Consumer Price Index, the research stated.

Naturally, with employees utilizing care more at typical levels following the first year of the COVID-19 pandemic, medical claims have increased and continue to grow.

Inflation will affect costs, as will other factors like new technologies, severity of catastrophic claims, blockbuster drugs, and increasing share of specialty drugs, Aon notes.

When it comes to health plans, the research revealed employer costs shot up by 3.7% in 2022, while employee premiums from paychecks rose by 0.6%.

"In what remains a tight labor market, employers are absorbing most of the health care cost increases," Debbie Ashford, the North America chief actuary for health solutions at Aon, said in a statement. "Employers are budgeting higher due to uncertainty and the anticipation that inflationary pressures will increase the cost of health care services."

One approach to alleviate high costs is to target patients with chronic and complex conditions, the analysis states. Ashford notes it is not uncommon to see 1% of membership making up 40% of spending in a given year.

By identifying and predicting when costs associated with long-term complex conditions can arise, employers can find solutions to spending.

"The effect of chronic conditions has far-reaching implications beyond what we see with health care costs, out to the other areas of the business, like absence and productivity, disability and worker's compensation," said Farheen Dam, Aon's North America health solutions leader. "By focusing on chronic conditions, not only are we improving the health and happiness of employees, but we're helping to improve the way they live and work."