Aon Projects Health Costs for Large Companies to Rise 5% in 2022

Costs for large U.S. employers that pay for their employees’ medical care will increase on average five percent to more than $13,000 per employee in 2022, predicts insurance broker Aon.

This increase would be slightly less than what employers budgeted this year compared to last, according to the professional services firm. Budgeted health care costs for clients increased to an average of $12,792 per employee in 2021, an increase of 5.2 percent from 2020.

The company said the analysis uses its database that captures information for more than 700 U.S. employers representing 5.6 million employees. The data represents $74 billion in 2021 healthcare spending.

The analysis notes that employer health plan costs and medical claims were suppressed for most employers in 2020 due to the COVID-19 pandemic, when a lot of care was postponed or skipped during quarantines. Employers have been anticipating that the medical claims experience will return to more typical levels of growth in 2021 and 2022.

“Looking ahead to next year, medical utilization levels are expected to be higher than were observed since the start of the pandemic,” said Ed Cwikla, Aon’s chief global actuary for Health Solutions. “Preventive and outpatient care are the medical services projected to increase the most in 2022.”

Cwikla said utilization of telehealth services is also expected to rise, continuing the trend observed during the pandemic.

In terms of 2021 plan costs, employer costs were budgeted to increase 6.2 percent, while employee premiums from paychecks were slated to be a more modest 1.2 percent increase from 2020. Plan costs represent the employer’s and employee’s combined premiums for medical and prescription drug costs but exclude employee out-of-pocket payments such as deductibles, co-pays and co-insurance.

On average, employers subsidize about 81 percent of the plan cost, up from 80 percent in 2020. Employees paid the remainder, according to Aon’s analysis.

Increase to U.S. Medical Plan Costs from 2020 to 2021

“In a tight labor market, employers are willing to absorb most of the health care cost increases,” Cwikla said. “Employers are budgeting higher due to uncertainty and the anticipation of members facing health conditions with increased severity due to unmanaged or undiagnosed chronic conditions, ‘long haul’ COVID-19 patients and those with increased mental health needs.”

Slight Increase for Employees in 2021

Employees in 2021 are contributing about $4,505 for health care coverage this year, of which $2,482 is paid in the form of premiums from paychecks and $2,023 is paid through plan features such as deductibles, co-pays and co-insurance.

Source: Aon

Topics Trends Aon