Despite rising medical inflation, employers continue to protect workers from costs

The costs of everything have increased in recent years, including health services and, therefore, insurance coverage for health care as well. Medical inflation constitutes a real challenge and pushes American companies to innovate to continue to offer their employees much-appreciated health coverage. Employers continue to offer robust and affordable employer-sponsored insurance (ESI) given the importance of this benefit to their workforce.

As the largest source of health benefits in the United States, ESI provides high-quality coverage to more than 160 million Americans and their families. Despite rising health care costs, employers continue to provide affordable health insurance coverage, reducing the burden of medical inflation on American families. A recent study conducted by Mercer found that more than two-thirds of employers do not plan to pass on increased costs to their staff or will pass on less than the expected rise in healthcare inflation in 2024.

• 160 million
  

  ESI provides high-quality coverage to more than 160 million Americans and their families.

• 2/3
  

  More than two-thirds of employers do not plan to pass on rising costs to their staff or will pass on less than the expected rise in healthcare inflation in 2024.

“They don’t want to add more financial stress to employees who are also struggling with inflation, especially at this time when they’re really counting on their health benefits to keep their employees working for them,” Beth said Umland, CEO of Mercer. Director of Health and Benefits Research.

The results demonstrate that employers remain agile and recognize the value of covering a significant portion of their employees’ healthcare expenses. A survey of large companies by the Business Group on Health tells a similar story. “This is the second year in a row that most employers have chosen to absorb rising health care costs in order to keep costs more affordable for employees,” the organization wrote.

This all builds on an earlier report from the Employee Benefit Research Institute (EBRI) that found that rising costs are not discouraging companies from offering ESI plans.

To help control costs, employers are adopting the type of personalized services and advanced tools that make ESI so attractive to workers. Mercer cites increased interest in wellness programs, disease management, nursing hotlines and price transparency tools. These benefits highlight that incentives for employers and employees are aligned with the pursuit of a healthy workforce.

Even in the face of growing medical inflation, many employers are still working to strengthen their benefits and close coverage gaps. Axios notes that this means expanding mental health service options, increasing support for menopausal women, and creating lifestyle accounts designed to help people get and stay healthy.

Employers continue to offer ESI because it’s the right thing to do and it’s also mutually beneficial. ESI not only provides high-quality employee benefits, but also delivers a 47% return on investment (ROI) for companies with 100 or more employees. This means that for every dollar spent on ESI, employers recouped $1.47 in financial benefits. An Avalere Health study found that the ESI system is a critical recruitment and retention tool for employers. Companies that offer employer-sponsored health insurance boost their productivity as well as their corporate reputation.

• 47%
  

  The return on investment for companies with 100 or more employees that offer ESI.

• $1.47
  

  For every dollar spent on ESI, employers recouped $1.47 in financial benefits.

ESI continues to be the backbone of the U.S. healthcare system, and employers are not shying away from their role in this area. From small family-owned businesses to large corporations, businesses of all sizes recognize the value of health coverage and its importance in retaining a strong workforce. Above all, employers strive to keep healthcare costs low to avoid additional burdens on families and provide them with financial peace of mind.