The future of employer-sponsored health care: strategic responses and cost containment opportunities

For benefits professionals, administering employer sponsored health plans and providing employee participants with access to affordable, quality health care is one of the greatest economic challenges of today — and the foreseeable future. Finding the right balance between a benefit package that is adequate and affordable — yet financially sustainable — has never been easy. Employer-sponsored health benefits have persisted despite recent policy changes and broader trends like the Affordable Care Act (ACA), public health exchanges and health care inflation. However, initiatives currently under consideration, such as an extension of ACA subsidies and the provision of a public option, may cause employers to reconsider their commitment to offer health benefits. One of the biggest factors — and a well-documented issue — is the rising cost of coverage and its impact on affordability for both employees and the employer. Employers point to increased pressure from drug prices, high-cost claims and inflation of hospital and provider fees. The 2023 increase in health plan premiums for 2023 was twice the increase in 2022 due to inflation and utilization trends. These challenges are compounded by the impact of COVID-19 and significant post-pandemic challenges. While plan sponsors may be cheering an end to the public health emergency, organizations face new bumps in the road. 

What’s next? Many employers are encountering impediments such as volatile economic conditions, labor issues, and government health policies in their efforts to sustain health coverage as a cost-effective employee benefit.

In a study published by the Commonwealth Fund, What Employers Say About the Future of Employer-Sponsored Health Insurance, the Employee Benefit Research Institute (EBRI) examines the conditions that might lead employers to discontinue health benefits. EBRI conducted interviews with more than two dozen benefits executives working in a variety of industries and representing firms that employ from 300 to 250,000 employees.