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The Skyrocketing Costs Of Employer-Sponsored Health Care Premiums

August 8, 2022, by Eric Calciano

man hand holding 3D plus low polygonal iconEmployer-sponsored health care remains one of the most sought-after employee benefits across America. Unfortunately, rising health care premiums have made it difficult for many plan participants to continue coverage. According to Willis Towers Watson, employers can expect health coverage costs to jump at least 5%-9% over the next year. Randa Deaton of Purchaser Business Group on Health predicts a 10%-12% increase.

Why does this larger-than-usual jump matter? According to Axios, this latest ballooning cost is expected to be passed down to nearly 50 percent of Americans who currently receive coverage through their employer. Rising costs of employer-sponsored health care premiums have forced many companies to reduce benefits, lower contributions, or eliminate health plans altogether.

Much uncertainty remains concerning how much more and for how long premiums will rise. In the meantime, it is important for employers to understand the severity of these increases and what they can do to reduce costs while maintaining quality benefits.

Rising Premiums – Why Is It Happening?

According to Mercer’s 2021 National Survey of Employer-Sponsored Health Plans, the average per-employee cost of employer-sponsored health insurance increased 6.3 percent in 2021.

Many employers have chosen to pass on these costs to their workers, resulting in a high degree of scrutiny. Employers struggle to maintain an affordable health care plan that is accessible to everyone while facing rising cost pressures. Finding a solution to these rising costs is critical to retaining talent, reducing turnover and maintaining morale.

graph showing the high cost of health care with usd bank notes a stethoscope and calculatorHealth care costs in the US have risen dramatically over the past several decades. In fact, a study by the Kaiser Family Foundation (KFF) and the Peterson Center on Healthcare found that, when adjusted for inflation, health care spending increased nearly a trillion dollars from 2009 to 2019.

The study showed that health care spending in 2019 was nearly $3.8 trillion, or approximately $11,582 per person. These costs are expected to reach $6.2 trillion, or around $18,000 per person, by 2028.

So, what exactly is causing this rapid rise in employer-sponsored health care costs? A combination of factors is at play. Inflation is a leading cause of rising premium costs. Health spending and medical care costs typically outpace growth in the rest of the economy.

Moreover, health care expenses represent a large share of gross domestic product and many families are feeling the pressure as the cost of health services and premiums start to grow at a rate that surpasses their wages.

Increased provider expenses may also be to blame for the rising costs of employer-sponsored health care premiums. Currently, hospitals and health care providers are well-positioned to demand higher prices.

A recent report by the Center for Studying Health System Change found partnerships and mergers between insurers and medical providers to be one of the most prominent trends in the country’s health care system. Lower individual market competition has put insurers and providers in a position where, without opposition, they can drive up health care service prices.

covid-19 virus under microscopeThe COVID-19 pandemic has also played a critical role in rising premiums. Throughout much of 2020 and into 2021, many states in the US were shut down to prevent the spread of the coronavirus, preventing many individuals from receiving the care they would normally receive otherwise. Now that the country is open once again, consumers’ use of health care services continues to rise as more people schedule the care that they deferred during the pandemic.

Customized Health Care Plan Solutions

As health care premiums continue to rise, many employers are left unsure of how to keep coverage expenses manageable. Most businesses do their best to avoid passing on increased costs to employees but may feel compelled to cut back on benefits or reduce contributions to make up for rising premiums.

Many employers are turning to customized health care solutions to maintain quality benefits for their workforce while finding opportunities to increase insurance premium savings.

With a customized health care solution, businesses can gain more control over the selection of their health care plan and can choose a policy that better fits their employees’ unique needs.

Customized health care plan designs can also result in significant savings for employers without the need to reduce employee benefits or employer contributions. This type of solution can be a win-win for both employers and employees in the long term.

Call the Experts at New City Insurance

New City Insurance is an experienced and trustworthy employee benefits consulting firm specializing in insurance, tech services, hr compliance, and benefits consulting. With help from New City, employers can implement a customized health plan solution that will help increase benefits that meet employees’ needs while maximizing insurance savings. To learn more, request a consultation online or call 888.210.2765.

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Carol Zhang
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04:29 06 Mar 22
As a rapidly expanding national media organization, the employee benefits strategy and administration that New City has provided us during our growth has been invaluable. They have been proactive about informing us of the different benefit strategies available to us as we grow as well as managing the additional compliance laws and reporting requirements at each stage of our growth.
Claudia Villalobos
Claudia Villalobos
20:14 03 Mar 22
New City Insurance made navigating through all the health insurances super EASY. Their documents are highly informative, professional, and easy to work with. Thank you for making the process of choosing a health plan so simple. You guys are THE BEST!
Philippe Salas
Philippe Salas
17:02 22 Feb 22
I never expected to have a good time talking to an insurance salesman, but let me tell you Brendan was quite the treat. He was very helpful explaining the options and has a wonderful sense of humor. I hope to speak with him every time I call.
Jennifer Polito
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Super easy enrollment process. Fast and friendly customer service. If you are looking for an insurance company that is there for you every step of the way I highly recommend New City Insurance.
Rocky Salas
Rocky Salas
23:46 07 Jan 22
So friendly, I hope to speak to him again in all my future insurance needs.
Rocky Salas
Rocky Salas
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So friendly and soft spoken. I hope to speak to him again in all my future insurance needs.
Jose Brena
Jose Brena
13:20 06 Jan 22
Eric Calciano has been extremely helpful in finding and selecting the right insurance coverage for our company. With many options out there Eric assisted us on getting a low cost provider saving more than 20% than from our competitors and providing excellent coverage for our employees.
Anastasia Beaverhousen
Anastasia Beaverhousen
17:05 28 Dec 21
Signing up for insurance was quick and easy. Felicity Sundsboe
SFCC
SFCC
22:08 29 Nov 21
Jeff Stoltey and his team provide excellent customer service. Jeff has always provided my company SFCC with straightforward options. I went to a larger insurance company only to RUN BACK to Jeff at New City Insurance. I recommend them to anyone needing insurance without hesitation.
Kevin Luby
Kevin Luby
19:13 22 Oct 21
Quick, easy & informative. We were able to secure quality insurance for our small business on a tight deadline. Thanks for the help New City.
Theresa Ruybol
Theresa Ruybol
19:30 01 Jul 21
Eric was so great with us. He was very patient and kind as we are a newer smaller organization who is growing rapidly. With that said, we had made our inquiry, he had great rapid response and mostly had to wait on me. Any request that we made and/or questions we had, he was great answering and helping us understand. Then when we were ready for all documents and to move forward, Brendan helped with getting that together and the two of them worked their magic on New City's end to notify me of what was needed, assist me in that process and confirming that all was complete and approved for the coverage. I just want to say thank you all again so much, as insurance has always been confusing to me, and you all made that process go a lot smoother.Thank you
Andrea Ordendorff
Andrea Ordendorff
21:06 07 May 21
I've been working with both Clayton and Brendan for well over a year. As the purchase of our dental practice was delayed well over 14 months they both patiently supported me and continued to make themselves available. When we were officially ready to sign up they made the whole process seamless and super easy. This team is highly knowledgeable, professional, supportive, and efficient! I can't thank them enough for everything they've done.
T W
T W
22:32 30 Aug 20
I love New City Insurance. I never had a good experience dealing with insurance brokers until I started working with Brendan. He’s awesome! He is patient with me and takes the time to answer all my questions. I’m very grateful for all his help and hard work!
Mary Jane Deyette
Mary Jane Deyette
00:57 11 May 20
Jeff Stoltey is so awesome...even thru my company had only two employees, he took the time each year to research and find the best plan for us. The only reason I am leaving New City Insurance is because we no longer have any employees. Thank you Jeff
Alma Ortiz
Alma Ortiz
22:25 23 Feb 20
Brendan was awesome! I couldn't figure out how to pick my plan and he returned my call on a weekend to help me. Outstansing service!
jessica kavanagh
jessica kavanagh
19:53 13 Feb 20
Brendan was so helpful I definitely recommend him if you’re in need of good help and getting it done promptly. Thankyou so much again.
Tricia DeYoung
Tricia DeYoung
19:49 13 Feb 20
I was very thankful I inquired about this info. with Brendan. He was very helpful so I understand the benefits available much better now. Thank you Brendan.
B Bayer
B Bayer
17:43 24 Sep 19
NCI handled almost everything from start to finish. Clayton and Brendan made the plans easy to understand and walked me through the application process. They got me my ID numbers before my cards arrived so that I could keep an appointment I had already scheduled. My last broker wouldn't have done that. 5 stars!
Jessica Lehr
Jessica Lehr
03:36 07 Jun 19
Our staff was interested in a health plan, but we didn't know how beneficial a solid employee benefits package would be for our business to expand. We'd lose prospective employees because they had more options for their medical insurance which was sometimes more valuable than more pay. The New City team was amazing and gave us as many affordable options as possible so that everyone had their needs met.
Mike McClay
Mike McClay
19:36 03 May 19
My employer uses New City as their insurance broker, and I'm always amazed when I call in for assistance by how knowledgeable and attentive their staff is with my requests. Their online benefits platform makes selecting insurance plans pretty darn easy. I would highly recommend their services.
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