Next to wages, your organization will spend more on healthcare costs than nearly any other expense this year. In fact, the Society for Human Resources Management predicts that employers will shell out as much as $15,000 per year per employee for healthcare premiums in 2019. That comes to $15 million a year for every one thousand employees. In an organization paying an average annual salary of $40,000, employers can expect to pay 137% of that salary when they include the cost of healthcare - and even more when they consider the other expenses associated with a new hire.
In comparison to global costs
America's costs rise above those in nearby countries; the average cost of providing benefits to Canadian employees is a little over $8,000 annually, while costs in European countries are substantially less than the US and - with the exception of Switzerland and Germany - less than Canadian costs, too.
There are a number of theorized reasons for rising corporate healthcare costs in the US: the population is older and perhaps sicker, there is better better access to healthcare, driving patients to seek services more often, and increased use of technology and government involvement in healthcare have driven costs up. Read more about those reasons here.
A summary of employee contributions
Employers aren't alone in this struggle: employees often struggle to pay their portion of healthcare premiums and medical bills while still making ends meet at home. While large employers pay 70% of healthcare premiums on average, that still leaves 30% to the worker. This means that the average American worker is paying $1,427 per year toward premiums for a single plan and $5,431 per year toward premiums for a family plan.
In addition, employees are responsible for deductibles, coinsurance, and co-payments throughout the year, adding to the out-of-pocket cost of healthcare. The vast majority of workers have deductibles in excess of $1,000: 46% of those with single plans have a deductible between $1,000 and $2,999 while 78% of those with family plans have a deductible between $1,000 and $5,000 or higher. This means that despite employer dedication to lowering healthcare costs for employees - and the price tag that comes with that commitment - employees are still facing tremendous obstacles when it comes to footing the bill that's left.
Corporate strategies for reducing costs
The 2019 Large Employers' Health Care Strategy and Design Survey conducted by the National Business Group on Health found that employers are taking new initiatives this year to reign in healthcare costs without sacrificing employee wellness. Those initiatives include:
- adding opportunities for virtual care (telehealth visits, etc.) to reduce the cost of services
- implementing onsite clinics
- reducing high-cost claims by providing nurse-centered coordination of care
- adding a platform for consumer engagement
Additionally, many employers have outsourced some aspects of human resources and wellness in order to offer the best benefits at the lowest rate of pay, implement and maintain wellness programs, and better understand the factors that drive wellness and healthcare costs in organizations.
Because 50% of healthcare costs can be attributed to lifestyle-related behaviors like smoking, lack of exercise, and poor diet, wellness programs and onsite reduce medical and absenteeism costs for employers. In fact, employers can see a reduction of $3.27 in medical costs and $2.73 in absenteeism costs for every dollar they invest in their wellness program.