The average worker in the U.S. will not be happy to hear this: they're likely to spend an average of $5,200 in health care costs next year.
That's according to a new analysis from Aon, which points to both inflation in medical costs and increases in employees' cost share for their health care as causes. In fact, Aon says that those two factors will boost U.S. employees' health care cost increases in 2018 to the highest levels in three years.
The analysis of actual employer-based health plan results used data calculated using Aon's Health Value Initiative database, which captures health care cost and benefit data for over 450 large U.S. employers representing 10 million participants, more than 1,260 plans and $54 billion in 2017 health care spending. And the picture isn't pretty.
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After plan design changes and vendor negotiations, 2018's average health care cost increase for U.S. employees is projected to be 7.2 percent, up from 6.9 percent in 2017. The average costs for health care, including employee premiums and out-of-pocket costs, are projected to be $5,248, up from $4,895 in 2017, and employee premium costs are projected to average $2,678. This is 18 percent of the total health care cost, Aon says, which is consistent with cost sharing percentages over the past seven years.
Average out-of-pocket costs are going up, too, with the average for employees projected to be $2,570 — that amounts to 17 percent of the total health care cost. This is up from $1,258, which in 2011 was 12 percent of the total health care cost.
And total budgeted health care costs per employee, including employer premium, employee premium and employee out-of-pocket expenses, are projected to top $15,000 in 2018, up from $14,266 in 2017.
After plan design changes and vendor negotiations, the average health care rate increase for midsize and large companies was 3.9 percent in 2017. Aon projects that average health care cost increases for midsize and large companies will be 4.5 percent after plan design changes and vendor negotiations in 2018.
Stephen Caulk, vice president and chair of Aon Health's trend committee, said of the findings in a statement, "Our projections, as well as sources like the S&P Healthcare Index, demonstrate an acceleration in cost, which will likely rise at a faster rate for both employers and employees. Companies need to get bolder about adopting strategies and programs that enable them to manage cost for themselves and their employees, improve employee health and wellbeing and optimize the use of high-quality, lower cost providers within the health care delivery system."
And then there are prescription drug costs. A separate Aon analysis comparing the first six months of 2016 and 2017 found that the gross cost of prescription drugs increased by 7 percent, with brand-name prescription costs increasing 13.2 percent. However, these increases were partially offset by the reduction in prices for generic drugs. Specialty drug spend, on the other hand, increased as a percentage of overall drug spend from 35 percent to 40 percent and is expected to reach 50 percent of drug spend by 2019.
"As brand name drug prices increase, we see an associated increase in drug manufacturer rebates," John Malley, senior vice president and leader of Aon's pharmacy consulting team, said in a statement. Malley added, "As the value of rebates increase, employers are seeking ways to receive the benefit of these rebates in a timelier manner."
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