Health Care Costs for Employers Will Rise 6.5% in 2023, Aon Report Says

Average costs for U.S. employers paying for employee health care will rise 6.5% in 2023, global professional services firm Aon found Thursday. Costs per employee will be $13,800, compared to $13,020 in 2022.

The report used information from Aon’s Health Value Initiative database, which includes health care costs and benefit design for nearly 700 US employers. These organizations employ 5.6 million employees and account for $76 billion in healthcare spending in 2022.

The projected 6.5% increase in average costs for U.S. employers is more than double the 3% increase experienced by employers in 2022, according to the report. However, the increase is lower than the 9.1% increase in the consumer price index, which was announced on Thursday by the US Bureau of Labor Statistics.

Medical claims were lower at the start of the pandemic as many patients postponed care, creating a smaller budget in 2022. But now claims are slowly returning to normal levels for employers and inflation is rising, according to The report.

“In stark contrast to the past few decades, we measure that U.S. employer healthcare budgets will be nearly three times lower than the Consumer Price Index this calendar year,” said Debbie Ashford, chief solutions actuary. healthcare for North America at Aon. in a press release. “Despite this historic event, employer healthcare costs are projected to increase by 6.5% in 2023 due to economic inflationary pressures.”

Inflation is generally slow to affect health care due to the multi-year nature of contracts between providers and payers, but it will likely become more prevalent over the coming year, Ashford added.

To combat rising costs, Aon recommends that employers address the expense burden associated with patients with chronic and complex health conditions. Ashford said “it’s not uncommon” for 1% of members to generate 40% of employers’ healthcare spending in any given year. Collecting data and analysis on these conditions can help plan sponsors reduce costs.

“The effect of chronic disease has far-reaching implications beyond what we see with healthcare costs, on other areas of business, such as absence and productivity, disability and workers’ compensation,” said Farheen Dam, Aon’s head of healthcare solutions in North America. “By focusing on chronic disease, we not only improve the health and happiness of employees, but we help improve the way they live and work.

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