U.S. Employers Expect Health Care Costs to Increase 5% in both 2016 and 2017

August 16, 2016

According to the Willis Towers Watson 21st annual Best Practices in Health Care Employer Survey, U.S. employers expect their health care costs to increase 5% this year and next with plan changes, and 6% without plan changes. These increases are at historical lows, but slightly higher than in 2015 and still more than twice the rate of inflation.

The survey also found that in the face of these continuing cost pressures, employers will make modest to moderate changes to their plans and programs to manage costs. However, according to Julie Stone, a national health care practice leader for Willis Towers Watson, given employee affordability concerns, most employers will focus on changes to high-cost benefits rather than on changes that would add to employees’ out-of-pocket costs.

The high-cost services that will get the most attention are pharmacy and especially specialty pharmacy, and surcharges for coverage of working spouses who are eligible for coverage from their own employers.

Employers also are encouraging employees to use centers of excellence for specialty care that have proven track records of delivering quality services at less cost. Telemedicine is being adopted by employers as another source of cost savings. In an article in Politico reporting on the survey and employer adoption of telemedicine, Allan Khoury, a senior consultant for Willis Towers Watson, said, “We think the savings are real.”

To read the press release announcing survey results, click here.

To read two articles on the findings, click here for Kaiser Health News and here for Politico.

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