Pension & Benefits News Employers expect health benefit costs to rise 3.9 percent in 2020: Mercer
Monday, September 30, 2019

Employers expect health benefit costs to rise 3.9 percent in 2020: Mercer

By Pension and Benefits Editorial Staff

Total health benefits cost per employee is projected to rise 3.9 percent in 2020, according to preliminary results from Mercer’s National Survey of Employer-Sponsored Health Plans. Based on responses from 1,511 U.S. employers, Mercer found that cost-shifting to employees will be less of a factor than in recent years, with just 43 percent of responding employers raising deductibles or otherwise cutting benefits to hold down cost in 2020. Since 2014, the underlying medical trend, the amount costs would rise if employers renewed plans without making changes, has decreased from 8 percent to 5 percent, easing some of the pressure on employers to make short-term cost cuts. During this time, employers have been adopting tactics that seek to reduce cost via improved health outcomes, such as targeted support for specific health conditions and steering plan members to higher-quality providers.

“While this continues the trend of low single-digit increases that began in 2012, health benefit costs are still rising faster than overall inflation. And with the economy slowing, employers know they can’t afford to be complacent,” said Tracy Watts, Mercer’s National Leader for U.S. Health Policy.

In support of higher quality care, employers continue to add tech-enabled programs designed to help members with specific health issues such as diabetes, insomnia, and infertility. In 2019, 62 percent of respondents with 500 or more employees offer one or more of such targeted solutions, compared to 55 percent in 2018, Mercer noted.

In addition, the survey found that improving access to health benefits information and resources is another growing trend. In 2019, 40 percent of respondents with 500 or more employees say that all or most of their benefit offerings are accessible to employees on a single, fully integrated digital platform—most often through a smartphone app—compared with 34 percent in Mercer’s 2018 survey.

Survey results also show employers taking action to help ensure plan members receive high-quality care. For example, 39 percent of employers with 500 or more employees now provide access to a Center of Excellence (COE) for cardiology, bariatric surgery, cancer and other complex treatments. Further, 16 percent say they steer employees to the COE with lower cost-sharing or even by requiring its use.

“Employers have been experimenting with new approaches to tackle high costs, inconsistent quality, and low patient satisfaction,” said Watts. “While there’s still so much more to do, it’s encouraging to see signs that health innovation may be starting to slow health cost growth—pwithout shifting cost back to employees.”


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