2021 Health Care Costs Could Reach Double Digits

Kaiser Family Foundation (KFF) reports that since 2012 the cost of family coverage has increased 3 to 5 percent annually. The COVID-19 pandemic is changing that trend. Even though it’s not known exactly how the pandemic will affect health care benefit costs in 2021, PwC’s Health Research Institute projects that increases for employer-sponsored health plans could range anywhere from 4 to 10 percent. This is the first time in 15 years that PwC is reporting a double-digit projection for health care benefit costs. One of the main reasons the pandemic has prompted such a wide range of projected increases is that many people delayed both preventive and elective care this year for fear of going into a doctor’s office and contracting COVID-19. Experts are concerned about what might happen if the level of care in 2021 returns to normal levels. About 157 million people have employer-sponsored health insurance — the largest source of health insurance in the United States, according to KFF. This is more than any other type of coverage, including Medicare, Medicaid and individually purchased insurance on the Affordable Care Act exchanges. Employer-sponsored health care is popular because employers and employees can get significant tax deductions and because it’s economical. The average employer-sponsored family coverage in 2020 is $21,342, according to KFF. Of that amount, employees paid about $5,588 and employers paid the rest. Employer Options KFF data indicates that since 2010 average family premiums have increased 55 percent, a rate of increase that’s at least twice as much as wages (27 percent) and inflation (19 percent). Despite the annual increases, the National Alliance of Healthcare Purchaser Coalition reports that employers generally did not make any drastic changes to their health plans for 2021. Most employers are focusing more on how to get their businesses up and running again after city- or state-mandated closures. Employers are expected to actively start reviewing their plans at the end of 2021 in preparation for 2022 health care benefits. A deductible is the specific dollar amount a health insurance plan requires a member to pay out of pocket toward covered medical care each year before insurance pays for covered medical expenses. Increasing the deductible continues to be a popular way for employers to keep premium costs down. KFF reports that more than 83 percent of covered employees have a deductible in their plan, up from 70 percent a decade ago. The average single deductible is $1,644. That’s much higher from the $917 average a decade ago. One of the biggest cost-cutting trends taking center stage during the pandemic was telehealth. Telehealth allows members to talk to a physician or mental health counselor using computers or mobile devices. Telehealth gives individuals the opportunity to seek care and get prescriptions without leaving the safety of their homes. The Business Group on Health’s annual survey on trends revealed that 53 percent of large employers are planning to expand their virtual care options for 2021. In addition, many are extending virtual options to new areas such as: Chronic care management Prenatal care Weight management. Mental health and well-being counseling Musculoskeletal issues, such as physical therapy for back and joint pain. In addition to the growing interest in virtual care as a way to save money and get care safely, some employers are joining the trend toward on-site health clinics. According to the group’s survey, 61 percent of the employers surveyed plan to offer on-site clinics in 2021. These clinics give employees easy access to immunizations plus provide care for situations where virtual care is not enough or chronic care management is necessary. There also is interest is directing employees to centers of excellence. A center of excellence is a high-quality provider that specializes in a certain area of treatment and is recognized by the medical community as providing the most expert and highest level of care. Eighty-one percent of the respondents to the Business Group’s survey said they would recommend centers of excellence to employees. Even though employers are expecting health care costs to rise in 2021, Mercer’s National Survey of Employer-Sponsored Health Plans said that only 18 percent planned to transfer those additional costs to employees. This approach is in sharp contrast to how employers reacted to the 2008 economic recession, which led many of them to trim health benefits.