Health Care Costs Increasing for Employers

September 16, 2022 • Christine Zenteno

 Health Care Costs Increasing for Employers

Health care costs have significantly increased after remaining relatively flat in 2020, likely due to delayed nonemergency care during the pandemic.

Survey findings

Cardiovascular disease, cancer, and musculoskeletal conditions are the top contributors driving health care costs in 2021 and 2022. In the 2023 Large Employers’ Health Care Strategy Survey, conducted by nonprofit Business Group on Health (BGH), employers indicated they are seeing more late-stage cancers, likely due to delay of diagnosis and treatment during the pandemic.

According to survey respondents, cost increases are projected to be 5 percent in 2022 and 6 percent in 2023. Employers are expecting to cover about 82 percent of the cost of employee coverage in 2022, an increase from 80 percent in 2021. Employers are looking at reforming care delivery systems to address health care and prescription drug costs to avoid shifting rising costs to employees. This may include more virtual health opportunities, expanding access to mental health services, and developing initiatives to reduce health inequities within health plans.

Large employers responding to BHG’s survey overwhelmingly noted concerns about prescription drug cost increases, which are roughly 21 percent of overall healthcare spending. There are opportunities to bring down these costs through pharmacy program tactics such as prior authorization, site-of-care management, and case management. However, CancerCare, a national organization providing free support services to help people manage cancer, notes these measures can sometimes create unintended consequences. This can include higher out-of-pocket costs for employees potentially leading to treatment delays and nonadherence to medication. Patricia Goldsmith, CancerCare’s Chief Executive Officer said, “No employer wants to place a burden on employees that can lead to worse outcomes, debilitating suffering, higher medical expenses, increased financial pressures, lower productivity at work and increased absences.”

TRS-ActiveCare

During the 87th Regular Session of the Texas Legislature, several bills were passed related to the Teacher Retirements System and school districts participating in TRS-ActiveCare, specifically the ability for districts meeting set criteria to opt out and offer an alternative health care option. Rises in health care costs for employers and employees noted above may have a significant impact on self-insured and fully insured districts.

Districts currently enrolled in TRS-ActiveCare and eligible to opt-out should consider the cost impact for the district and its employees if an alternate health insurance plan is offered. Similarly, districts not currently enrolled with TRS-ActiveCare and eligible to opt-in may review their claims data to determine the cost effectiveness of switching to TRS-ActiveCare for the district and its employees. For eligible districts, written notice of opt-in or opt-out must be provided to TRS by December 31 of the year before the first day of the plan year of the election.

For more information on rising health care costs, check out the SHRM website. Information on TRS-ActiveCare opt out (SB 1444) and links to related documents can be found in the HRX article Legislative Update: Teacher Retirement System Issues.


Christine Zenteno is an HR & compensation consultant at TASB HR Services. Send Christine an email at christine.zenteno@tasb.org.


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Tagged: Benefits, Compensation, "Health insurance", "TRS ActiveCare"