Multiple 2023 predictions for employers say that they will pay more for their employees’ health care as we head into the new year. The big question is how much more? That depends on group size, the selected insurer, and other important factors.
2023 Cost Increase Forecasting
Fierce Healthcare reported in August on an Aon forecast of a 6.5% increase in costs. The Society for Human Resource Management (SHRM) says medical plan costs per employee are expected to rise 5.6%. That’s based on a prediction by HR consultant Mercer. It’s up from 4.4% forecast for 2022 – but below the year’s 8.5% inflation rate.
The Willis Towers Watson 2022 Best Practices in Healthcare report found employers are expecting a six percent increase in 2023. The International Foundation of Employee Benefit Plans says employers are anticipating a 7.5% increase in medical plan costs. Buck, the country’s oldest actuarial consulting firm with 100+ years of experience, has forecast a 2023 increase in the range 5.8% to 6.9%.
Factors Influencing Health Costs
Several factors contribute to rising health care costs, including:
- a rebound in the utilization of health benefits (after a lag due to COVID-19);
- spiraling labor costs
- expensive, new medical technology;
- higher prescription drug costs;
- increasing catastrophic health claims.
Increased consolidation in the industry has also contributed to higher health care costs. In 2021, AHIP reported a lack of competition contributes to hospital prices. The trade group said costs are 12% lower in areas where there is more competition. AHIP also called out private equity last year, noting its increasing role in health care mergers and acquisitions.
Strategies for Managing Costs
In the past, employers responded to higher expenses by shifting some costs to employees. On average, employees pay a quarter of their total health insurance premiums, while their employers pay the rest.
In 2023, employers are more likely to implement a multi-part strategy to manage health insurance costs, including:
- Shifting from a single health plan to multiple plans or a health insurance exchange. That increases options for employees, so they can tailor a plan to their specific health care needs. It also helps control costs for businesses.
- Increased use of self-funding, including Health Reimbursement Arrangements (HRAs).
- Implementing programs to combat fraud, waste, and abuse.
- Direct contracting with health care providers (like hospitals and medical groups).
- Offering increased coverage for telemedicine and virtual health care services.
- Implementing new benefit programs. (These can include wellness programs, health care navigation, and concierge support services.)
- Expanding voluntary benefit options, including hospital indemnity, critical illness, and other coverage.
CaliforniaChoice gives you an easy way to control health care costs for your business. CaliforniaChoice is a multi-carrier health insurance exchange that has served California small businesses since 1996.
With Defined Contribution, you choose how much you want to contribute to your employee benefits. You can pick a Fixed Percentage (50% to 100%) of a specific plan and/or benefit. Or, you can opt to contribute a Fixed Dollar Amount for each employee. Your employees then apply your contribution to the health plan and benefits they prefer. If an employee selects a plan that costs more than your contribution, he or she simply pays the difference. At renewal, you can adjust your contribution – up or down. That gives you complete control over the cost of your benefits for another year.
More Reasons to Like CaliforniaChoice
There are several other reasons to consider CaliforniaChoice:
- It offers eight different health plans in a single program. You can choose Anthem Blue Cross, Cigna + Oscar, Health Net, Kaiser Permanente, Sharp Health Plan, Sutter Health Plus, UnitedHealthcare, and Western Health Advantage.
- Greater access to doctors, specialists, and hospitals: The CaliforniaChoice roster of HMO, PPO, EPO, and HSA-qualified plans is growing for 2023. You and your employees have access to 20 provider networks and 130+ coverage options. CaliforniaChoice offers you access to more doctors and specialists than any program in the state.
- Coverage options for Dental, Vision, Chiropractic & Acupuncture, and Life Insurance.
- Simplified administration – You get one monthly bill for all of your employees. Plus, you have access to an award-winning website to manage benefits, and one phone number for answers to all employer and employee questions.
With CaliforniaChoice, you get value-added benefits at no extra cost, too. The Business Solutions Suite includes HR support, Flexible Spending Accounts (FSAs), Cal-COBRA or COBRA billing, and initial set-up of a Premium Only Plan. The POP allows employees to pay insurance premiums pre-tax, while also reducing your tax liability as an employer.
Beyond that, the Member Value Suite offers outstanding savings for you and your employees. You have access to discounts on a range of wellness products and services as well as entertainment, travel, and online shopping.
Talk With a Broker to Learn More
Ask your employee benefits broker or insurance agent for help understanding your options. Coverage through CaliforniaChoice is offered exclusively through brokers. That’s because CaliforniaChoice believes you are better served when you work with an insurance professional. If you don’t already have a broker, you can here.