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Cracking the Code for the Health Insurance Landscape: Trends and Strategies for 2023

By May 31, 2023No Comments

As an employer, you have to offer robust employee benefits to attract and retain top talent. At the same time, controlling healthcare costs is a high priority for both businesses and individuals. Below you’ll find information to help you achieve both goals while navigating the health insurance market this year.

The 2023 Health Insurance Outlook

Several noteworthy patterns are emerging in the health insurance industry. Some key 2023 health trends to watch include the following:

  • Premiums have held steady, but hikes may be ahead. According to the 2022 Employer Health Benefits Survey from KFF, the average annual premiums for employer-sponsored health insurance in 2022 were $22,463 for family coverage and $7,911 for single coverage. These figures are similar to the average premiums from 2021. However, it’s worth noting that the 2022 premiums were set before high inflation became a factor, meaning premium hikes may be coming in the near future.
  • Managing prescription costs is taking center stage. Prescription costs are a common pain point, but recent efforts have sought to curb costs. According to CMS, the Inflation Reduction Act will lower prescription drug costs in Medicare by allowing negotiation with manufacturers and introducing an annual cap. In the private health insurance sector, Mark Cuban Cost Plus Drug Company has made headlines with its launch of a program for employers.
  • Telehealth remains popular. During the COVID-19 pandemic, many people tried telehealth for the first time. It appears that telehealth’s newfound popularity will outlast the pandemic. According to the 2022 healthcare market analysis from KFF, 90% of firms that offer health benefits include telehealth in their plan with the highest enrollment. Among large firms, this figure rises to 96%.
  • Mental health is receiving more attention. The CDC says more than one in five U.S. adults lives with a mental illness. As stress levels rose during the COVID-19 pandemic, many people became more vocal about their mental health needs, especially when it comes to work and employee benefits. In a survey from the American Psychological Association (APA), 81% of workers said how an employer supports mental health will be an important factor when they look for future work.

Health Insurance Strategies to Overcome Challenges

As inflation stretches budgets, cost control is becoming increasingly important for both employers and individuals. At the same time, Americans are facing numerous physical and mental health issues. According to the National Association of Chronic Disease Directors, nearly 60% of U.S. adults have at least one chronic disease. In the Mind Share Partners’ 2021 Mental Health at Work Report, 76% of respondents reported at least one symptom of a mental health condition over the past year. In light of these statistics, robust health insurance coverage is critical. Otherwise, people may find that they still can’t afford to receive care, despite paying for insurance.

When selecting a health insurance plan, it’s important to balance coverage needs with cost control. Employers also need to consider worker expectations and how health insurance benefit offerings will impact recruitment and retention – skimping on health insurance could backfire when it comes to employee engagement.

In a survey from Robert Half, 46% of respondents said they are planning to look for a new position in 2023. A robust employee benefits package that includes comprehensive health insurance may be key to convincing workers to stay or accept a position.

To balance costs and coverage, employers need new strategies.

  • Consider alternative prescription strategies. KFF found that 24% of people taking prescription drugs find it difficult to afford their prescriptions. Even with health insurance, prescriptions can be unaffordable. Pharmacy benefit managers and alternatives to traditional health insurance may help control costs. Another alternative is utilizing drug manufacturer programs to save a significant amount of money.
  • Switch to generic prescriptions whenever possible. Research published in the National Library of Medicine found that generic drugs can cost 30% to 80% less than their brand-name counterparts.
  • Shop around for the best prices. The same medical procedure may have a different cost depending on where it’s performed. New hospital price transparency requirements make it easier for people to find the best deals, but some people are still overpaying because they don’t shop around.
  • Leverage telehealth. Digital transformation in healthcare is creating new opportunities for improved access to care. Patients can use telehealth for a variety of services, including mental health, physical therapy, and urgent care. In addition to health plans that include telehealth options, there are standalone telehealth providers.
  • Consider using a Health Savings Account (HSA). A high-deductible health plan can lead to premium savings, but it can also result in more out-of-pocket costs. HSAs are a popular and tax-advantaged way to handle these costs. Since the funds don’t expire, HSAs can pull double duty as a retirement planning tool.
  • Embrace education. The more people know about health insurance and how it works, the better positioned they are to obtain the best value from their coverage. Individuals need to understand how their networks, drug formularies, and out-of-pocket costs work. They should also be familiar with how to compare prices for medical services and when to consider using alternative strategies to cover medical costs. Employers can help by educating employees on these issues.

Other Health Insurance Resources and Tools

As you refine your health insurance strategy, the following tools can help you navigate the current health insurance landscape:

  • The KFF 2022 Employer Health Benefits Survey has key insights into healthcare trends. Employers can use this report to see how their health plan offerings stack up in a number of different categories (such as costs, telehealth offerings, and plan options) compared to the benefits other employers are offering.
    • Watkins Insurance Group offers benchmarking resources that can help you drill down to research how your plans/contributions stack up against the market.
  • CMS has tips on how to use hospital price transparency data to shop around. Individuals can use these tips to find the best deal for medical tests and procedures. Employers can share these tips with their workers.
  • The Department of Labor (DOL) has a self-compliance tool for mental health parity. Under the Mental Health Parity and Addiction Equity Act, the limits group health plans impose on mental health and substance abuse cannot be greater than those for medical and surgical benefits. SHRM says the DOL and state insurance regulators have recently increased enforcement actions.
  • Contact the employee benefits professionals at Watkins Insurance Group. We’re here to help your organization explore options and find the plan to meet your unique needs.