Employers face better healthcare in 2023

Corporate health insurance costs are increasing again for 2023.

In small businesses, which covers employers with 1 to 100 employees, regulators in New York state approved an average premium increase of 7.9% for 2023, above the 7.6% approved for 2022, but well below the 16.5% requested by insurers. .

Larger companies, where prices are set individually with carriers, expect healthcare costs to jump 6% next year compared to an average increase of 5% this year, according to a recent survey by WTW, a global human resources consultancy.

However, these modest increases are better than expected by many experts who say the effects of inflation are not yet visible.

"I think we're going to see inflation play into benefit costs over the course of three years," says Dr. Jeff Levine Shears, MD in Boston and president of population health at WTW.

 

He explained that there are many multi-year contracts between insurance companies and service providers - mostly hospital systems - still in effect that were negotiated before the current inflation periods and do not yet reflect higher reimbursement levels.

When contracts are renewed, Levine Shears says, we'll see the real impact of inflation on health care benefits costs.

James Eckhardt, president of Peak Advisors Inc. , a health insurance broker in Holtsville, agreed on this view.

"I still have concerns about price increases next year," he says.

He also said that carriers typically enter into multi-year contracts with hospitals and provider groups.

“The concern is when these contracts are renewed in the coming years, the very high rate of inflation that affects us all will catch up to these medical contracts, causing an increase in the cost of care, and therefore an increase in premiums,” Eckhardt says.

Fortunately less than expectations
Meanwhile, the small scale of the projected increases for 2023 came as a surprise to many.

"I think most people were expecting a much higher increase just because of the inflationary pressure we've seen," says Greg Bajak, managing partner and founder of WizdomOne Group in Millville, which provides wealth, insurance and benefits advice to business owners.

Some may suffer from it.

The 7.9% rate for small groups is an average across many insurance companies and plans statewide, Bajak says.

"Carriers can have higher or lower plans," he says.

Lisa Robertson, co-founder of Sexy Salad in Hauppauge, says it's been quoted double-digit increases in recent years.

While it offers health plans to its employees, none of them chose to participate in the plans due to the high employee share costs. Instead, they get insurance in other ways, including following through on their spouse's plans, she says.

ACA . Market
This year Robertson and her husband John chose to obtain their insurance through the state insurance market established under the federal Affordable Care Act, New York State Health. The rates she said were a little better than the private market.

"Every year they keep going up," Robertson says.

On top of management costs, 42% of employers surveyed cited managing employee affordability as a top priority, according to a WTW survey.

However, many employers as one solution "are looking to offer health plans that may offer a trade-off for reaching fewer hospitals and doctors for a lower cost of care," says Levine Shears.

Eckardt says narrow nets are smaller networks provided by carriers that provide cost savings by limiting the number of providers, thus allowing them to negotiate lower compensation leading to lower overall premiums.

Examples include the Empire BCBS Connection Network, the UHC/Oxford Metro Network, and the HealthFirst Pro EPO Network, he says.

Other solutions Pajak says include making sure its employees are aware of all of their healthcare options. Older employees may find that looking into Medicare and purchasing a supplement plan instead of employer coverage, he says, may be easier to obtain.

Other companies add spousal surcharges to employees who add a working wife to their coverage and exercise "salary ranges," providing higher health care support for lower-paid workers, says Levine Shears.

“Employers need to recognize that there are significant upward pressures in health care and put in place initiatives to counter these increases to keep health care affordable for employees and their businesses,” he says.