CHP: Inflation = Health Insurance Premiums to Rise 5.6% (national) in 2023

August 15, 2022

NYS Council notes:  The information from Mercer (cited below) does not factor in annual premium increases the state Department of Financial Services (DFS) will approve for 2023 for NYS licensed health insurers who have filed requests for premium increases that (as I recall) were reported to average 16%.   

New York State mandates that all insurance carriers notify their customers of their intent to request rate increases for the Community Rated Market (Employer Groups 1-100) to the Department of Financial Services (DFS) at the same time they file those requests to the state. Many carriers file their rate increase requests in late May and early June for rates effective in January of the following year. You may have received a notice recently from your health insurance carriers. The weighted average rate increase for all health insurance carriers in 2022 is 14%. This is the highest overall rate increase requested since at least 2017, when DFS started posting these rate increases. A listing of all the carriers rates increases can be found HERE.

Note:  Last year, the DFS announced the health plan rate increases they had approved for 2022, in mid-August.  


The cost of providing health care to employees will increase next year by nearly 6%, report finds

CHP, 8/15/2022

The costs employers will incur providing health care to employees are expected to increase by 5.6% next year, according to early results from consulting firm Mercer’s latest survey of employers.

In the report, which was released June 22 and remains open, 864 employers across the nation responded by Aug. 4. The 5.6% cost increase for next year is significantly higher than the 4.4% increase that was predicted for this year, and 2023’s predictions still lag behind national inflation rates. Mercer predicted that employers have not fully felt the effects of inflation. The 5.6% prediction reflects changes employers would make to “hold down” costs.

“Because health plans typically have multiyear contracts with health care providers, we haven’t felt the full effect of price inflation in health plan cost increases yet. Rather it will be phased in over the next few years as contracts come up for renewal and providers negotiate higher reimbursement levels,” said Sunit Patel, the company’s chief actuary for health and benefits. “Employers have a small window to get out in front of sharper increases coming in 2024 from the cumulative effect of current inflationary pressures.”

Mercer does not have specific data on New York employers’ responses yet.

Eric Linzer, chief executive of the New York Health Plan Association, which works with 29 employers across the state that provide coverage for 8 million New Yorkers, said the rising costs of providing benefits are “inextricably tied” to the rising costs of health care—which won’t be going away anytime soon.

Linzer cited higher prices that doctors, hospitals and pharmaceutical companies are charging for care and drugs; ongoing costs for Covid-19 testing, treatments and vaccines; and legislative moves that drive up the cost of insurance, such as the $6.5 billion the state collects on health plan taxes annually.

Despite the rising costs, Linzer said, members of the association remain focused on providing quality care for their employees.

Survey results echo that. According to Mercer, employers are prioritizing increasing the benefits they provide next year while focusing on affordability for employees. Most employers reported they would not raise employees’ deductibles or copays. While 36% of employers said they would make cost-cutting decisions next year, that is down from 40% this year and 47% last year.

Mercer’s survey suggested that employers will not be increasing workers’ share of the cost of coverage next year. Large employers—companies with 500 or more workers—reported their employees would have to pick up 22% of health care premiums through paycheck deductions. That holds stable from this year and last year.

Candice Sherman, chief executive of the Northeast Business Group on Health, which is based in the Financial District, said the group’s members are focused on providing care that takes the impact of the last two years into account.

“Prioritizing benefits to retain and attract employees is definitely what we are hearing from our members,” Sherman said. “Employers are also keenly aware of the toll the pandemic and sociopolitical issues have had on overall employee health and well-being, including mental health, and want to ensure they are offering and communicating about a continuum of support, including a robust EAP and digital options.”

She added that making sure care is affordable for employees with lower incomes is a priority as well.

Linzer said the same for employers in his association, adding that many are trying to negotiate better reimbursement rates with doctors, hospitals and pharmacies.

Patel told Crain’s that health care costs are likely to soar next year, and Mercer expects employers will need to change the way their employees seek and get care.

“Strategies may include promoting the use of higher quality providers,” he said, “leveraging technology [such as] virtual health [and] remote monitoring and improved clinical management.”

Although Mercer said the Covid-19 pandemic’s impact on the price of care has been “fairly modest” thus far, that could change.

“We do expect that as provider contracts are renegotiated (which will be accompanied with larger increases than in the recent past), new, expensive gene and cellular therapies are introduced and staffing shortages ease, these will add to the growing cost pressures,” Patel said.

The predicted 5.6% jump in the cost of providing care next year would not be as significant as the increase in 2021, when employers’ costs rose by 6.3% to an average of more than $14,500 per employee. New York has the highest price of care per employee—more than $17,000 in 2021, Mercer reported.

Mercer, which is headquartered in Midtown, is a subsidiary of global firm Marsh McLennan. —Jacqueline Neber and Maya Kaufman