Corporate America is Fretting the Rising Costs of Employee Healthcare
Health insurance costs are expected to surge by as much as 6.5% next year, according to a recent survey from consulting firm Mercer.
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Healthy workers are happy workers. They’re also expensive.
Health insurance costs are expected to surge by as much as 6.5% next year, according to a recent survey from consulting firm Mercer. Now, The Wall Street Journal reports, this particular side-effect of inflation has corporate finance chiefs scrambling for preventative care.
Health Eats Wealth
Healthcare costs have long been a major expense for US employers, with the cost for covering an employee running an average of $14,000 per year, according to Mercer — and over $22,000 per year for a family, according to a Kaiser Family Foundation survey last year. It’s why a 6% increase can make the balance sheet look as scary as a bad diagnosis.
Some CFOs, according to the WSJ, are even predicting double-digit increases in costs, with the price of deductibles and premiums rising faster than employee wages in some cases. The price spike has pushed some finance chiefs to explore creative solutions:
- In the past decade, health insurance rates have typically increased by only 3% to 5% each year. In 2015, the average cost of healthcare plans per employee was around $11,500.
- Some finance chiefs are adding extra cushions to healthcare budgets, considering asking employees to contribute more, and devoting more time to shopping around and negotiating lower prices.
“CFOs, who are used to predictability for other goods and services, are seeing much more volatility in [healthcare] expenses,” said Sunit Patel, chief actuary for US health at Mercer. “That’s one of the biggest challenges that we see going forward.”
Check-up: The volatility comes amid one of the hottest labor markets in recent history — which has placed a premium on perks and benefits offered to new employees. To lower costs, Walmart recently expanded virtual primary care coverage to the vast majority of its 2 million employees, which the company expects to lower healthcare expenses by as much as 11%. If the nation’s largest private employer serves as any indication, your next doctor’s appointment may be a Zoom call.