NJBIA's Public Policy Forum: The Road to Recovery REGISTER

A new national survey shows the average total health benefit cost per employee grew 3% in 2019 to $13,046, a moderate increase in line with other surveys, but this time, it’s larger companies that are seeing the biggest increase, largely because they have put a hold on increased cost-sharing with their employees.

The 3% increase comes on top of a 3.6% rise in 2018, according to a survey of nearly 2,600 employers by the HR consulting firm Mercer. Companies with 500 or more employees saw their average costs rise 3.4% in 2019 compared to an increase of just 1.9% for employers with fewer than 500 employees.

Mercer reported an average premium cost of $13,455 for larger employers while those with fewer than 500 reported an average premium of $12,374.  By contrast, NJBIA’s 2018 Health Benefits Survey reported that the smallest businesses, those with 1–24 employees, paid an average of $20,460 for full family coverage while those with more than 250 employees paid an average of $17,664.

The economics haven’t changed; larger employers still benefit from having a larger pool of insureds and economies of scale. Their costs are rising faster because more companies are deciding not to share increased health insurance costs with their employees.

“When asked about their priorities for the next five years, 42% of large and midsize employers identified ‘addressing healthcare affordability for low-paid employees’ as an important or very important strategy,” Mercer stated in a press release. “And in fact, in 2019 most large and midsize employers hit ‘pause’ on requiring members to pay more out-of-pocket for health services as a way to hold down premium costs.”

That doesn’t mean larger companies are not concerned about their costs as well. Another trend Mercer noted is larger companies taking an active role in managing employee health, particularly those with complex health issues that generate the most expensive claims.

The survey showed 80% of larger employers rate intensive employee support and advocacy programs as either important or very important for the next five years. And 58% of all large and midsize employers offer one or more programs to help employees manage chronic conditions or other health needs, such as musculoskeletal conditions, infertility and insomnia.

“Typically the goals of these programs are empowerment, convenience and lower costs,” said Tracy Watts, Mercer’s national leader for U.S. Health Policy. “For example, a physical therapy app that reminds patients when to do prescribed exercises, provides instructions, and even counts reps could mean fewer trips to a clinic, less out-of-pocket cost for the employee, and a better outcome.”