2020 Healthcare Benefit Trend Alert
March 18, 2020
Healthcare benefits continue to gain local and national spotlight as an essential issue for our country to address. At BOK Financial Insurance, we are committed to helping employers make confident, informed decisions on benefit design and strategy. Please find our 2020 Benefit Trend Alert below.
Stable, But Concerning News…
According to a recent SHRM article, large employers are predicting a 6% increase to 2020 healthcare costs based upon their 2019 structure, and a 5% increase with changes to plan design, network, premium subsidy and/or contracts. The article cites various healthcare trend surveys predicting increases anywhere from 4% to 6.5% for 2020. Although these cost increases are consistent with prior years, they remain two to three times higher than other inflationary measures including the consumer price index (CPI) and worker’s earnings. The National Business Group on Health predicts the total cost of health benefits to exceed $15,000 per employee in 2020. It is no surprise that two of the top concerns expressed by human resources and C-suite executives are:
- The rising cost of providing health care benefits
- The ability to attract and retain talent in a low unemployment economy
Employers Aren’t the Only Ones Concerned…
Employees (aka healthcare consumers and patients) are feeling the pain of healthcare inflation as well. In 2019, the Kaiser Family Foundation estimated that the average worker contributes 18% of premiums for employee-only coverage ($1,242 annually) and 30% for family coverage ($6,015 annually). These premiums are in addition to “point of service” cost-sharing. The Kaiser Family Foundation also notes the average deductible of $1,655 in 2019 represents a 36% increase over the past five years.
As more of their “disposable” income is taken by healthcare, employees are saving less for retirement and/or paying down less existing debt (i.e., student loans, credit cards).
Healthcare Costs vs. Household Income:
Employee Premium and Deductible Contributions Exceed 10% of Household Income in Most States
Source: Premium contributions and deductibles – Medical Expenditure Panel Survey-Insurance Component (MEPS-IC), 2008-2018; Median household income and household distribution type – analysis of the Current Population Survey (CPS), 2008-2019, by Ougni Chakraborty and Sherry Glied of New York University for the Commonwealth Fund as reported by abcnews.go.com
The Good News…Not Everyone is “Average”
It’s important to note that all trend and benchmark studies create an “average” result; within the average, there are winners and losers. High-performing employers are embracing winning strategies that not only combat rising healthcare benefits costs but also win the battle to attract, retain and engage top talent. These companies experience employer and employee cost increases of less than 2 percent annually, and some have even experienced a decrease in healthcare spending. These winning strategies can include:
- Holding their broker accountable as a business partner and consultant.
- Working collaboratively with finance and human resources leadership.
- Determining key performance indicators to be measured and managed consistently.
- Investing in “an ounce of prevention” over “a pound of cure.”
- Defining health holistically: physical, emotional and financial.
- Demanding transparency and cost control for prescriptions, especially specialty Rx.
- Creating value-based plan designs with aligned incentives.
- Leveraging modern technology for employee decision support and advocacy.
- Engaging employees (and their dependents) as stakeholders in the success of this important component of total compensation.
Our Commitment to You…
BOK Financial Insurance is committed to delivering these winning strategies and results to our clients. We know that proactively managing healthcare costs reaps considerable dividends for the business and its employees. Our team is accountable to help you build a better health plan with better outcomes for your business and your employees.
“We can’t solve problems by using the same kind of thinking we used when we created them.”
– Albert Einstein
Insurance products and services are offered by BOK Financial Insurance, a subsidiary of BOK Financial Corporation. BOK Financial, a division of BOKF, NA, Member FDIC. Equal Housing Lender. Employee benefits coverage and services vary depending on group size and number of participants enrolled. Additional fees and exclusions may apply for benefit administration and enrollment technology.