According to the Kaiser Family Foundation (KFF), in 2021, the average cost of employee health insurance premiums for family coverage increased by 4% from the previous year to $22,221. The average annual premiums for an individual’s plan also increased 4% to $7,739 this year. Why haven’t more employers addressed the rising costs of employee healthcare with value-based care?
U.S. health insurers report billions as small providers face stress in the first quarter. The nation’s largest health insurer, UnitedHealth Group, reported $4.9bn in profits in the first quarter of 2021 compared to $3.4bn in the same period in 2020 – a 44% increase. This has to be upsetting to employers experiencing riding employee healthcare costs. The answer may be in offering a value-based healthcare model.
Value-based healthcare is a healthcare delivery model in which providers, including hospitals and physicians, are paid based on patient health outcomes. Under value-based care agreements, providers are rewarded for helping patients improve their health, reduce the effects and incidence of chronic disease, and live healthier lives in an evidence-based way (Source: NEJM Catalyst)
Research published in the New England Journal of Medicine shows that a value-based healthcare model can help solve the cost and quality problems that plague the U.S. health care system. Value-based models encourage a team-oriented approach to patient care. Under a value-based model, medical care is not siloed. This means that primary, specialty, and acute care are integrated and that healthcare providers work as a networked team to deliver the best-coordinated care. For example, treatment plans may require the contributions of pharmacists, behavioral health providers, social services, specialists, and more. Each contributing party shares in the incentives of a positive outcome.

While the federal government has proposed negotiating the cost of drugs with pharma for Medicare, it still ignored the high costs hidden in plain sights, like patients who rely too much on prescription medications to tackle health problems addressed with lifestyle changes. It’s not going to be easy but using incentives can help.
According to a report from the Kaiser Family Foundation, family premiums for employer-sponsored coverage have jumped 47% over the last decade. That rate outpaces both wage growth (31%) and inflation (23%) over the same time.
According to recent employer surveys, employers throughout the U.S. expect their group health plan premiums to increase, on average, a bit above or below 5 percent in 2022, even after taking cost-management initiatives into account. Health insurers forecast that overall costs for health claims are also expected to rise—Higher PremiumsBased on responses from 378 U.S. employers during June and July 2021.
As a nation, we can’t allow healthcare dollars to continue to grow so quickly. Prescription drugs costs are just a small part of healthcare costs (11%). Until we try different models to get people to take more of an active part in preventive healthcare costs will keep rising.