Dive Brief:

• The average cost of employer-sponsored health insurance was just shy of $6,000 per person in 2018, according to a Health Care Cost Institute report released Feb. 13.
• That translates to an increase of $610 per person on average since 2014, adjusting for inflation, per the report. HCCI attributed about three-quarters of the five-year growth in costs to the increase in costs for services, particularly facility payments for outpatient visits and procedures. Out-of-pocket spending increased 14.5% between 2014 and 2018, but this growth was lower than the cumulative growth in total spending, HCCI said.
• Spending on professional services also grew, particularly for psychiatry — the specialty saw spending growth of 43% since 2014. As for drug costs, newly available generic drugs partly explained slowing growth rates for prescription drugs, HCCI said. Though generic drugs accounted for 88% of all prescriptions, out-of-pocket payments for those drugs were less than one-fifth of payments for brand drugs.

Dive Insight:

HCCI's findings track with those of other observers, including the Business Group on Health (BGH). Last year BGH, which focused on the healthcare spending of large employers, projected that the average annual cost per individual would top $15,000 in 2020.

In the face of these increases, employers are relying less in recent years on strategies that shift costs to employees, according to a 2019 report by Mercer. Instead, many have shifted their targeted their efforts to improving solutions for specific health issues like insomnia, diabetes and infertility, Mercer said.

Others are finding other ways to take an "activist" role in healthcare, embracing new models for delivering healthcare, like an accountable care organization or high-performance network. BGH has noted increased employer interest in virtual care, an umbrella of solutions that includes telehealth. This connects with the perceptions of consumers, who view virtual care as playing a big role in healthcare's future, outgoing BGH president and CEO Brian Marcotte previously told HR Dive in an interview.

Employers have also focused on the concept of choice in healthcare, expanding employees' choices away from previous industry trends toward consumer-directed health plans. That's in part because employees sometimes choose "negative" cost-saving behaviors, according to research by Alight. For example, some stop taking or take less of their medications to save money, or they may refuse care for themselves or a family member because they can't pay required out-of-pocket costs.

The most significant area of cost increases, however, may be prescription drugs. Marcotte previously told HR Dive that drug pricing, "has the potential to crush us." High out-of-pocket costs for prescription drugs may also explain lower satisfaction among employees in high-deductible health plans compared to their peers in traditional health plans, according to a January report by the Employee Benefit Research Institute.