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CNN Business
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Although Americans have been paying a lot at pumps and supermarkets this year, they have been largely spared the price hikes for work-based health insurance and doctor visits.
But this is about to change.
Experts say most workers can expect premiums and out-of-pocket costs to increase in 2023 at a faster rate than in recent years due to inflation. They will learn how much during the registration period open to employers, which usually occurs this month and the following.
“It’s going to be harder than ever for employees to be able to afford some healthcare essentials – and those are the people who have insurance,” said David Gilmett, chief executive of health solutions at Aon Professional Services.
About 155 million Americans have work-based health insurance, the largest source of coverage to date, according to the Kaiser Family Foundation.
Experts say companies are trying to minimize cost increases as they strive to hire and retain workers in a tight labor market. This could force some companies to subsidize more of their health plans — employers cover about 81% of workers’ premiums, on average — or find other ways to reduce their overall spending on Medicare.
While the cost of gas, food, and other necessities can change quickly based on inflation and market conditions, health care works differently. Premiums and personal fees that consumers pay are usually set up front and last for a year. Furthermore, contracts between insurance companies and medical providers are usually closed for several years.
In fact, healthcare costs go against their usual trend. It always rises faster than general inflation, but that has not been the case this year.
However, hospitals, doctors and other providers are still feeling the price pressure. Labor costs, especially for nurses and service personnel, and supplies increased sharply due to inflation and demand. And they’re seeing more patients this year, after many people avoided going to the doctor and getting medical exams in 2020 and 2021 due to Covid-19.
Because of these delays in care, patients are often sicker when they come in, said Dr. Jeff Levine Shears, chief of population health at Willis Towers Watson Consulting. Treating people with more advanced cancers, cardiovascular problems, and other conditions is more intensive and costly.
To address these and other factors, providers are paying insurers to raise reimbursement rates when it’s time to renew contracts.
Employers are expected to see their average health care costs rise 6.5% to more than $13,800 per employee next year, according to a recent survey by Aon of nearly 700 large employers.
That’s more than double the 3% increase in healthcare budgets companies experienced for 2022, but still far less than the 8.2% rise in annual inflation, according to the September Consumer Price Index.
Workers are expected to spend an average of 2.6% on healthcare this year, compared to 2021, Aoun calculated. That stems from a 0.6% increase in monthly premiums and a 5.2% jump in monthly premiums. In petty cash, on average.
Aon has not yet determined how much employees will be paid next year, but it is expected to be an even larger increase than in 2022.
However, employees may be spared the full impact of inflation. Experts said that after years of rising deductibles, co-pays and co-insurance levels, many employers are now reluctant to make it more expensive for their workers to actually get care. So companies are making changes to their health insurance plans to reduce the increases.
“There was a real crisis in affordability,” Levin Shears said. Employers “don’t want to offer people meaningless health insurance plans.”
About 20% of companies have added more money to their health care plans without taking money from employee salaries or other benefits this year, and another 30% are planning or considering doing so in the next two years, according to a Willis Towers Watson survey in 455 released. Medium and large size company last month.
But workers are still feeling the impact. The survey found that about 14% of employers transferred costs to workers through out-of-pocket expenses this year, while 24% did so through premium contributions.
An increasing number of employers are also looking to protect workers who earn less. More than a quarter of companies surveyed said that employees with low wages or who hold certain types of jobs are The survey found that lower premiums will be charged to other employees in 2022, and 13% are planning or considering implementing similar measures in the next two years.
Elizabeth Mitchell, CEO of Buyer Business Group on Health, which represents nearly 40 private companies and public entities that buy health coverage for more than 21 million Americans, said many larger employers are looking to reduce core costs in the health care system.
They are expanding workers’ access to telehealth and primary care in an effort to stem price increases. Some are challenging hospital fees, which are more transparent than they have been in the past, and assigning quality service providers to their employees.
“What our members are actually trying to do is interfere with the delivery system, more than they might have been in the past,” Mitchell said.
Next year will be just the beginning of a long period of increasing healthcare costs, experts said.
As contracts between service providers and insurance companies will expire at different times, pricing pressure will continue. This is likely to lead to even larger hikes: About 71% of employers surveyed by Willis Towers Watson said they expect “moderate to significant increases” in their costs over the next three years.
“Now that we’re in a period of higher inflation, this is going to work its way into these decades,” said Debbie Ashford, North American chief actuary for health solutions at Aon. For 2023, 6.5% [increase] somewhat silent.”
Originally published at San Jose News Bulletin
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