Health Plan Premiums Expected to Soar in 2023

by | Oct 20, 2022 | Healthcare

Employer-sponsored health plans will likely see premiums increase by an average of 6.5% in 2023.1 Some believe it is the shortage of healthcare worker and the need to offer more to recruit hard-to-find professionals, other attribute it to cost increases for supplies and services up 18% and 16% respectively, and pharmaceuticals up 21% from 2019 to 2022.2

This 6.5% increase estimate is from Fitch Ratings which is based on reports from the Bureau of Labor Statistics, McKinsey and Co., and Aon.2 After a slowdown in premium escalation for this year’s coverage (average 3.7% hike), the provider labor shortage be felt by sponsors (and members) next year. Fitch says the BLS report that health system labor costs grew 25% between 2019 and 2022.  “Medical facilities have experienced staffing issues, principally for nurses, for years prior to the pandemic. However, the pandemic exacerbated these issues, as physically and emotionally exhausted physicians and nurses retired or simply left the industry for other careers,” Fitch says.2

The Office of Personnel Management (OPM) has released the 2023 premiums for the Federal Employee Health Benefits Program (FEHB) and the Federal Employees Dental and Vision Insurance Program (FEDVIP). The overall average increase for the FEHB enrollees’ share of the premiums paid by federal employees and retirees will increase by an average of 8.7% in 2023. In 2022, it was only a 3.8% increase.3

When we look at how premium increases for health benefits compare to cost-of-living adjustments (COLA -for federal retirees) or pay raise (for current federal employees) amounts the picture gets darker. Current federal employees are likely to get a 4.6% pay raise in 2023 and retirees are estimated to come in around 8%.3

Even with the basic pay raises Americans are continually making less and paying more for everything from a gallon of milk to a gallon of gas and now for healthcare coverage premiums. Employers and employees are already looking ahead to next years benefits discussion and looking for ways to soften the expense for all parties. Hiring a knowledgeable broker or consulting agency to assist in the search for better healthcare alternatives like Reference-based Pricing solutions, Telehealth options and offering levels of coverage for your employees are some items to consider.