Job-Based Health Coverage Will Be More Expensive in 2021
Large employers expect the cost of providing health coverage to workers to increase next year, as employees seek care they put off during the COVID-19 pandemic.
Companies anticipate that health benefit costs will grow 5.3% in 2021, an increase slightly higher than the 5% increases employers projected in each of the last five years, according to the latest annual survey big employers by the Business Group on Health.
The average cost of coverage, including premiums and out-of-pocket costs paid by workers and their families, would reach roughly $15,550, up from an estimated $14,769 this year. Employees would shoulder about $4,665 of that.
In past years, employers have repeatedly overestimated their benefit costs. Ellen Kelsay, president and CEO of Business Group on Health, said Tuesday that there’s a fair degree of uncertainty in the projections for next year, since it’s unclear when the care that patients deferred during the pandemic will be rescheduled.
It’s also possible that chronic conditions that went unmanaged could worsen in coming years and become more costly. If that’s the case, employers may be underestimating costs for 2021, she said.
“There is a lot of uncertainty around what is actually going to manifest itself in terms of cost both this year and next year,” Kelsay said. “Many employers are also having a really hard time from a budgeting and actuarial perspective working with their health plans and consulting partners to really get a good handle of what that means.”
Even though benefit costs may increase next year, Kelsay said she doesn’t expect significant premium increases. In some cases, premiums may even decrease.
“I think what you’re also going to see is some employers hedging because they’re not really sure what the future is going to look like in 2021,” she said. “The worse thing they could do is to reduce premiums this year and then to snap back with some significant jump next year.”
Several health insurers have provided premium discounts to plan members in recent months to return excess premium revenue they collected while patients weren’t going to the doctor or getting expensive elective procedures. Self-funded employers have invested in their employees in other ways, including adding flexibility around paid leave or increasing access to virtual care, Kelsay explained.
According to the survey, 76% of employers made changes to increase access to virtual care, and 71% sped up telehealth and other virtual health benefits during the pandemic. Additionally, 71% said they offered paid administrative or emergency leave to employees, and 43% said they added new mental health benefits to support employees working from home.
The pandemic has also influenced employers’ long-term healthcare strategies. Already, most companies provide telehealth to their workers for minor services or mental healthcare. But for the coming years, more employers said they plan to offer telehealth for other services, including weight management, diabetes care management, dermatology and physical therapy, chronic kidney disease.
According to the survey, 54% plan to extend lower or no-cost mental telehealth services to workers next year. Nearly nine in 10 companies plan to offer more online resources on mental health, including apps, articles videos and webinars, up from 69% this year. About 65% of employers said they plan to train managers to recognize mental health issues and direct workers to services, an increase from 47%.
Interestingly, while many employees are still working from home amid the coronavirus crisis, employers plan to keep investing in on-site clinics. About 58% of large employers surveyed already have an onsite clinic, but that figure may rise to 72% by 2023. About a third of employers already offer primary care at the worksite, but an additional 26% plan to in the next few years.
The Business Group on Health surveyed 122 large employers covering 9 million people. Most of the companies surveyed employed more than 10,000 workers and about a quarter employed more than 50,000. The companies came from a diverse group of industries.
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