The cost of healthcare went up last year, according to a new report from Marsh McLennan Agency (MMA), a US-based subsidiary of global brokerage Marsh. The amount that employers spent on health benefits per employee grew by 5.2%, while the estimated cost of employer contributions to premiums increased by more than $1,400, to $11,762.
Healthcare inflation can affect employees, as well, the report noted, with 38% of Americans reporting they put off medical treatment in the last year due to cost concerns. MMA noted that “delayed care is associated with worse health outcomes and higher costs for patients and benefit providers.”
Younger workers appear to be feeling the pinch of high health costs the most, with 74% of millennial and 56% of Gen Z patients canceling doctors’ visits because of high costs, compared to 13% of Baby Boomer patients. Putting off behavioral healthcare, in particular, can be costly for younger age groups, said Monte Masten, chief medical officer with MMA. Given these trends, employer investment in incentives may be warranted, he told HR Brew.
Younger patients end up in the ER more often. Millennial and Gen Z workers showed lower utilization rates for primary care physicians (PCP) and preventative care visits, the report found. In turn, this group of employees ended up in urgent care or the emergency room (ER) slightly more often than their older counterparts.
Masten said the effect is particularly evident in behavioral health treatment. “If otherwise young, healthy employees don’t invest in PCP relationships, but then start struggling with mental health issues, they might end up in the ER,” he said. While behavioral health typically represents only 3–5% of an employer’s overall spend, “it can get expensive really fast when you have people that go into substance use disorder, rehabilitation, and so forth.”
These trends may have contributed to the fact that three in four employers saw their benefits costs go up in 2023, primarily due to prescription drug costs and an “increased need for mental and physical healthcare.” MMA found millennials had the highest rates of mental health conditions—such as ADHD, depression, and anxiety—compared to other generations. High health costs affect workers too, and younger generations have reported cost of living as a top concern in recent years.
“The prevalence of mental health has changed during the pandemic,” Masten said. “I think we’re seeing a new high, and I think it’s disproportionately affecting the younger generations.”
Incentives for care. To address concerns about low utilization of PCP and preventative care visits, some employers have put in place programs to incentivize employees to seek them out. Some employers can offer incentives through their insurance providers—Blue Cross Blue Shield of Massachusetts, for example, gives businesses with 100 employees or less the opportunity to participate in a “Healthy Actions wellness program,” which awards members with $300 “for getting a routine checkup and either maintaining or taking steps to improve their health.” There’s an incentive for employers with this program as well, as they can receive 7.5% off their premium depending on how many of their employees participate. Marathon Petroleum Corporation has an incentive program in partnership with WebMD; employees can earn $400 for completing a number of health-related requirements, including an annual preventative physical.
Another potential solution is investing in digital healthcare, Matsen added. While he recognized virtual care doesn’t work for everyone, “we’ve seen more and more vendor partners build on that primary care physician relationship through digital technology.”
Walmart and employers with the Health Transformation Alliance are among the organizations that have recently formed partnerships with virtual care providers in hopes of addressing the cost burdens associated with low primary and preventative care utilization, HR Brew previously reported.
About the Author: This report was written for HR Brew by Courtney Vinopal.
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