High cost of health care is top concern as employers compete for workers, survey finds

The soaring cost of health care is harming the ability of many employers to recruit and retain workers.

“The consensus among many of the responding employers is that attracting and retaining employees has become a street fight,” says Michael Thompson, president and CEO of the National Alliance of Healthcare Purchaser Coalitions. “Concerns about a recession and runaway inflation make it even more critical that employers are able to hire and keep top talent, and getting unreasonable health care costs under control can have a far-reaching impact on wages and ability to compete.”

In the coalition’s latest survey of more than 150 employers, 8 in 10 say health care costs affect their ability to remain competitive, while nearly three-fourths say these expenses crowd out wage increases. Among the other key findings:

• Affordability. Drug prices (93%), high-cost claims (87%) and hospital costs (79%) are the most significant cost drivers of employer-sponsored health benefits coverage for employees and their families.
• Transparency. Employers familiar with transparency tools are six to 10 times more likely to strongly disagree that hospital prices are reasonable and defensible, and 93% say hospital consolidation has not improved cost or quality of services.
• Purchasing strategies. Almost half of employers are using centers of excellence. Within the next one to three years, many employers are considering tiered networks (46%); site of care (43%); contracting and performance guarantees tied to Medicare pricing; and reference-based pricing (36%).
• Health strategies. Approaches that 9 out of 10 employers currently are using or considering are high-cost claims (94%); mental health and substance use access and quality (94%); hospital quality transparency (93%); price transparency (91%); and whole person health that covers both physical and emotional wellbeing (90%).
• Workforce development. Most employers (78%) strongly agree that recruitment and retention are even higher priorities post-pandemic, and 100% strongly agree that health and wellbeing benefits are critical.
• Hybrid workforce. Although two-thirds of employers permit some form of remote work, the complexity that comes with accommodating a hybrid workforce creates challenges, according to 93% of respondents.
• Fiduciary responsibility. More than 95% of employers agree that they have a right and responsibility to act as a plan sponsor fiduciary.

Read more: Health care costs increasing at slower rate for employer-sponsored plans, says survey

• Health equity. More than half of employers currently are engaging various departments to discuss company strategies. Forty-one percent are reviewing and addressing the role of workplace policies, with another 24% planning to do so.
• Reproductive benefits. Ninety-three percent of employers say they provide birth control coverage, 82% provide coverage of abortion services and 50% offer coverage of fertility services. Few are considering eliminating any reproductive benefits in light of the Dobbs decision. Four in 10 are offering or considering offering travel benefits, but the great majority are not limiting that benefit to abortion services.