Mercer survey: Health-benefit costs expected to grow 4.4 percent in 2021

Employers expect their health-benefit costs to increase 4.4 percent, on average, in 2021 compared to 2020. 

That’s according to early results from Mercer’s National Survey of Employer-Sponsored Health Plans 2020. 

The increase — based on 1,113 employer responses since early July — is “largely in line” with the average annual cost growth over the past six years, Mercer, a global consulting firm, said.

Still, health-benefit cost growth is now far outpacing the Consumer Price Index and wage growth, which have fallen to nearly zero.

Health plans face many unknowns in developing cost projections for 2021, according to Tracy Watts, a senior consultant with Mercer.

“Different assumptions about cost for COVID-related care, including a possible vaccine, and whether people will continue to avoid care or catch up on delayed care, are driving wide variations in cost projections for next year,” Watts said in an Oct. 1 release.

Survey findings

The Mercer survey found that employers won’t cut benefits to slow cost growth next year.

Even amid economic uncertainty caused by the COVID-19 pandemic, only 18 percent of employers responding to the survey say they will take cost-savings measures for 2021 that shift more health-care expense to employees, such as raising deductibles or copays. In fact, the majority of survey respondents (57 percent) will make “no changes whatsoever” to reduce costs in their medical plans in 2021. That compares to 47 percent making no changes last year, and just 44 percent in 2018. 

“This is different from what we saw at the start of the economic recession in 2008, which drove many employers to trim health benefits,” Watts said. “Given all the turmoil employees have been through this year, employers are putting big changes on hold, looking to balance economics with empathy.” 

The survey found that many employers are adding new resources to “support and engage” employees in the COVID era. 

At the top of the list are virtual office visits and other digital health-care resources. More than a fourth of all respondents (27 percent) and well over a third of the largest employers (37 percent of those with 5,000 or more employees) are adding or improving digital health-care resources. Those resource include telemedicine for episodic care, artificial-intelligence-based symptoms triage, “text a doctor” apps, and virtual office visits with a patient’s own primary-care doctor. 

“The pandemic has proven not only that we need virtual care, but that providers and patients will embrace it once they try it,” Watts said.

Responding employers also have other enhancements planned for 2021 that include voluntary benefits (22 percent), such as critical-illness insurance or a hospital indemnity plan and adding or improving behavioral health-care resources (20 percent). 

More than half of employers (59 percent) have provided managers with training on how to support employees’ emotional and behavioral health since the onset of the pandemic or are planning to do so. 

With schools and daycare schedules disrupted across the country, 45 percent of responding employers are permitting flexible schedules to allow parents to care for children during daytime working hours. However, even among the largest employers (5,000 or more employees, who tend to offer more generous benefit programs), just 16 percent provide a financial subsidy for in-home childcare, and only 12 percent provide a backup child-care benefit. 

Mercer’s full survey results will be published in mid-November, the company said.