Despite Rising Medical Inflation, Employers Continue to Shield Workers from Costs

Costs for everything have been on the rise in recent years, including health care services and, as a result, insurance coverage for health care too. Medical inflation poses a real challenge, and it’s leading American businesses to innovate to continue to offer highly valued health coverage to their employees. Employers are continuing to offer robust, affordable employer-sponsored insurance (ESI), given the importance of this benefit to their workforces.

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

"They don't want to add more financial stress on employees who are also coping with inflation, especially in this time where they're really relying on their health benefits as a way to keep employees working for them," said Beth Umland, Mercer's director of health and benefits research.

The findings demonstrate that employers are remaining nimble and recognizing the value of covering a significant share of their employees’ health 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 opted to absorb increased health care costs to keep costs more affordable for employees,” the organization writes.

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

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

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

Employers continue to provide ESI because it is the right thing to do, and it is also mutually beneficial. ESI not only offers high-quality benefits, but it provides a 47% return on investment (ROI) for businesses with 100 or more employees. This means for every dollar spent on ESI, employers got back $1.47 in financial benefits. A study from Avalere Health found that the ESI system is a critical recruitment and retention tool for employers. Companies that provide employer-sponsored health insurance strengthen productivity along with their corporate reputation.

• 47%
  The ROI for businesses with 100 or more employees who offer ESI.
• $1.47
  For every dollar spent on ESI, employers got back $1.47 in financial benefits.

ESI continues to be the backbone of American health system and employers are not wavering from their role in it. From smaller, family-owned businesses to larger corporations, companies of all sizes recognize the value of health coverage and its importance to retaining a strong workforce. Above all, employers are prioritizing keeping health costs low to prevent additional burdens placed on families and to provide them financial peace of mind.