The average cost of the coverage per worker rose by the largest amount in 2021 that it has since 2010.
The average cost of employer-sponsored health insurance per worker saw its highest annual increase this year that it has since 2010.
This occurred as the benefit costs rose faster than inflation and the earnings of the workers themselves.
The Mercer 2021 National Survey of Employer-Sponsored Health Plans showed that there was a 6.3 percent average increase in the cost of employer-sponsored health insurance this year. Employees and their families began seeking standard medical care to an increasing degree after having avoided it in 2020 as a result of the pandemic. Therefore, the average cost per employee among all employer plan sponsors with at least 50 employees has risen to $14,542.
Employers typically budget for an increase closer to a standard 4.4 percent, which is what many of them have done for 2022. What has yet to be seen is whether employers are seeing a sudden but temporary correction to the cost trend, balancing off last year’s small increase of only 3.4 percent, or whether it is the beginning of a period in which the cost growth will be greater.
Employers are hopeful that health insurance costs will level off again after this year made up for last year.
“Employers seem optimistic that this year’s sharp increase is simply a result of people getting back to care,” said Mercer Chief Actuary Sunit Patel. That said, he also added that a number of factors could make it possible that the cost growth acceleration could continue. “At the top of the list of concerns are higher utilization due to ‘catch-up’ care, claims for long COVID, extremely high-cost genetic and cellular drug therapies, and possible inflation in healthcare prices.”
Companies with fewer employees – that is, those employing between 50 and 499 people – saw a higher rate of cost growth for their health insurance than larger employers. Smaller businesses experienced an average increase of 9.6 percent, while the larger companies had a cost growth rate closer to 5 percent. Mercer stated in its report that smaller employers are those more likely to provide their workers with fully insured plans, indicating that insurance companies expected their costs to be notably higher in 2021 than they had been last year.