By: TAHP | Monday, October 23, 2023

What’s new: Kaiser Family Foundation released its 25th annual report on employer health benefits for 2023. After a year of mostly flat premium changes, costs are up 7% for employer coverage for employees and their families.

Main cost drivers: Rising hospital prices, such as facility fees, and a spike in demand for new, pricier diabetes and obesity meds are key culprits for the accelerated health insurance cost growth.

By the numbers:

• Employee Coverage: The average 2023 premium is $8,435/year.
• Family Coverage: Climbed to $23,968/year.
• Keeping Up: Over the last 5 years, premiums increased 22%, neck and neck with a 21% inflation rate.
• Wages vs. Premiums: Workers’ wages continue to face erosion. Wage growth lags behind with a 5.2% increase compared to premiums increasing by 7%.

Employees spared: While costs are increasing, employers aren’t raising employee deductibles due to the competitive job market and concerns about their employees delaying needed care.

Employers getting tough on prices: After decades of steadily increasing health care spending, employers may finally be getting serious about fighting back against excessive prices.

• Armed with new price transparency data, employers in Texas and other states are steering patients to lower-cost, higher-quality providers by reducing copays and incentivizing employees to shop for high value care.
• That tracks a new study by Morgan Health suggesting employers could get more for their health care dollars by incentivizing employees away from low-quality providers.
• Employers are also demanding better deals from their health plan administrators as they dig into insurers negotiated rates made public over a year ago.

Solutions: In Texas, lawmakers can focus on giving employers and their health plans more tools to rein in spending.

• Reform state rules to allow for incentive-based health plan designs where patients act on price transparency and have a bigger stake in the cost of their care decisions.
• Build on price transparency to require physicians, labs, and clinics to be upfront with health care pricing.
• Address abusive facility fees, which are increasingly being added to health care bills, creating new unwelcome surprises for patients.
• Expand transparency to quality of care so that patients can make value-driven decisions.

The bottom line: The escalating cost of employer health benefits is a critical issue, as it impacts the financial well-being of both employers and employees. Texas must tackle excessive hospital prices and avoid exacerbating the issue with new costly mandates.