Sixty percent of employees in a recent survey reported experiencing healthcare cost increases that outpaced inflation in the past three years, and 63 percent expect that trend to continue, signaling potential cost challenges in the future. Right now, annual raises are being neutralized by increasing healthcare insurance premiums. If pharma wants to retain people, they may have to develop a solution to lower healthcare insurance premiums.
The CEO of BMS took a hit to his compensation because so many people have decided to leave the company. I talked to a couple of people, and although their reasons for leaving were varied, they all complained about the high cost of their health insurance.
The average per-employee cost of employer-sponsored health insurance jumped 6.3 percent in 2021 as employees and their families resumed care after avoiding it due to the pandemic, according to HR consultancy Mercer’s 2021 National Survey of Employer-Sponsored Health Plans report, released in December. And it’s expected to get worse.
Employers in the U.S. expect their group health plan premiums to increase, on average, between 4.7 percent and 5.2 percent in 2022, even after taking cost-management initiatives into account, according to recent employer surveys. Health insurers forecast that overall costs for health claims are also expected to rise.
Health insurance is costly for both employees and employers:
- The average employer cost, including premiums, rose this year to an estimated $13,360 per employee, up from $12,501 in 2020.
- Employee contributions for premiums increased slightly to $3,331 in 2021, up from $3,269 in 2020.
As an employer, providing health insurance to your employees can give your company a competitive edge, as it can enhance your employees’ overall satisfaction and productivity. Health insurance costs can fluctuate wildly; however, the average annual prices for employers are $6,227 for single coverage and $15,754 for family coverage.
According to Glassdoor’s 2015 Employment Confidence Survey, about 60% of people report that benefits and perks are a significant factor in considering whether to accept a job offer. The survey also found that 80% of employees would choose additional benefits over a pay raise.
Better health, dental, and vision insurance topped the list, with 88% of respondents saying that they would give this benefit “some consideration” (34%) or “heavy consideration” (54%) when choosing a job. Health insurance is the most expensive benefit, with an average cost of $6,435 per employee for individual coverage or $18,142 for family coverage.
Employee Wellness Programs Don’t Work.
Data from the Kaiser Family Foundation show that 80% of large employers have a wellness program, and about half offer free screenings for BMI, cholesterol, blood pressure, and other health markers. The incentives to stay healthy are wide-ranging, from subsidized health classes to insurance discounts to cash payouts for meeting specific goals, like not smoking. Companies spend about $16,000 per employee on health care, with the employee spending about $6,000.
He said that wellness programs had become a $50 billion industry, but companies aren’t getting much bang for the buck. In the decades that such programs have been around, few firms have realized any savings. Yet Kaiser found two-thirds of companies want to expand their programs.
Wellness programs don’t work, and the reasons are multifaceted, but the main reason ties back to behavioral economics. Research in that field has determined that when goals are abstract and distant, such as lowering cholesterol, people respond better when they get an immediate reward for staying the course. While incentives work in some cases, randomized trials found no difference in health outcomes, cost savings, or absenteeism for workers in wellness programs.
Does this mean they all don’t work? I don’t think so. It means that the right employee wellness formula has not yet been found. It may be a combination of wellness programs tied to insurance premiums.
With the “great resignation” continuing, companies can retain employees with better health insurance coverage at a lower cost. I still don’t understand why some companies don’t join together to form their health insurance organization, but that might be too logical.