Quick look: Global healthcare benefit costs are projected to reach their highest point within the next 15 years with a 10% increase already on the horizon for 2023. This continuous acceleration is forcing employers to seek innovative ways to provide health benefits modern-day employees want and need. As a result, PEO brokers are being called upon to help manage expectations and strategize new ways to keep benefits affordable yet impactful.
Employers and employees alike have already felt the brunt of rising costs of healthcare benefits over the past several years. And, according to a recent survey conducted by Willis Towers Watson (WTW), increases aren’t expected to slow down any time soon. By 2037, healthcare benefits across the globe are expected to peak at their highest level. And individuals can expect to see an immediate jump as early as 2023.
Though comparatively speaking, North America is expected to drop in cost growth, covering medical expenses is still a factor employers are struggling with as they evaluate employee benefits. To get an idea of the reasons behind rising costs and solutions for how to manage them going forward, here’s a closer look at WTW’s survey insights.
Projected healthcare benefit cost trend average remains at 10%
In 2022, the global healthcare benefit cost trend exceeded the initial projection and rose to 8.2%. This percentage will continue to rise heading into 2023, reaching an average global increase of 10%, which has been largely affected by inflation and the increased demand for healthcare services.
Among the central global regions, North America expects a dip in cost trend, dropping from 9.4% to 6.4% in 2023. Though this seems promising for U.S. employers and their employees, the impact of this decrease has yet to be experienced. In fact, the opposite rings true with healthcare costs plaguing individuals’ ability to afford healthcare.
According to the survey, more than 78% of health insurers anticipate higher medical expenses over the next three years. This is due to the recognition of health disparities among diverse employee groups, conditions caused by the pandemic, and a need for change among employer health insurance plans. In short, healthcare demands have gone up and with them so have costs.
Musculoskeletal disorders remain high
Survey respondents shared musculoskeletal disorders, such as tendonitis and carpal tunnel syndrome, remained the top condition of incidence claims. These findings are likely the result of less physical activity over the past few years as people adapted to evolving stay-at-home orders. Additionally, the number of people working from home post-pandemic without proper ergonomic conditions has also caused these types of conditions to advance.
Mental health ranks among the fastest-growing conditions
The toll of the pandemic has highlighted the need for mental healthcare as part of an effective health insurance plan. Currently, mental health conditions rank fourth among the leading conditions by incidence costs but not claims. However, it’s expected mental health disorders, including anxiety and depression, will be among the five fast-growing in both costs and claims within the next two years.
Exclusion of DEI conditions persist
Diversity, equity, and inclusion (DEI) has transitioned from less of a trending topic and more of the standard of what employees expect with their healthcare coverage. Typically, health insurance plans have excluded DEI conditions such as fertility treatments and gender-reaffirming surgery. Meanwhile, a lack of diverse provider networks has left marginalized groups without proper care.
Handling changes in healthcare costs while still staying competitive
Fluctuations in costs, availability, and convenience for healthcare coverage have pushed businesses to either adapt or get left behind. And, often, it’s small- and medium-sized businesses (SMBs) facing the most challenges. Trying to balance what is affordable and sustainable with what employees and prospects want from today’s workforce requires full-time attention. Therefore, PEO brokers have been tasked with diving deeper into each client’s specific needs to create plan options to keep them competitive.
PEO brokers can lean on their resources to present more inclusive options to address coverage gaps. This is one of the first steps in creating health equity and better employee benefits. By partnering with a professional employer organization (PEO) like ExtensisHR, they can help their clients implement initiatives to reach these goals. ExtensisHR’s team of experts tracks healthcare trends and regulations and guides brokers and their SMB clients to the most favorable outcomes.
For instance, introducing telehealth options can lessen expenses while improving access to care. Virtual services allow patients to expand their provider network and schedule appointment times convenient to their schedule. Additionally, evaluating employee assistance programs (EAPs) with counseling, stress management coaching, and other wellness care can provide the mental health support employees seek. There’s also an opportunity to improve work-from-home conditions by creating perks and stipends to address ergonomic needs. These are examples of areas presently requiring the most attention and can guide efforts in the coming months.
However, no two workplaces are the same. As changes continue with regard to size and diversity growth, dispersed workforces, and a new generation of employees entering the fray, it’s important to match benefits accordingly. ExtensisHR provides tailored, comprehensive solutions flexible enough to adapt to company growth.
Rather than shoulder the full-time burden of HR responsibilities, a PEO solution provides cost-effective HR services which are accessible anytime, anywhere. In addition to benefit planning and implementation, services include payroll and tax administration, talent management and recruiting, and risk and compliance management.
It gives business leaders the freedom to focus on their business. And it allows them to maintain a better balance between managing costs and investing enough to stay competitive, whatever the current medical trends may be.
Even in business, healthcare is still personal and requires a people-first approach to establishing employee benefits. Empower your SMB clients by serving as a bridge of support to a PEO solution which can help them advance and succeed. Contact the HR experts at ExtensisHR today.