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Small Business Employee Benefits and HR Blog

Employer Health Benefits Costs Slow, and Other Key Trends - Mercer 2013 Survey

November 26, 2013
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Last week, Mercer released their annual National Survey of Employer-Sponsored Health Plans. According to they survey's findings, the cost of employer health benefits slowed to 2.1% growth in 2013 - with the average cost per employee averaging $10,779/year (including medical, dental, and other health coverage). However, employers expect the rate of growth to rebound next year, to 5.2%. 

The national survey included responses from ~2,800 public and private US organizations with 10 or more employees. Here's a review of their findings.

Summary of Key Findings

  • Health benefits costs rose faster for very large employers (5,000+ employees) who saw average increases of 3.7% compared to ~1% for employers with less than 500 employees.

  • The rate of growth varied by US region. The South saw a 5.3% increase, Northeast a 3.3% increase, West a 1% increase, and Midwest only a 0.1% increase.
  • To reduce cost increases, small employers shifted more costs to employees via higher deductibles. Larger employers were more likely to use consumer-directed health plans or employee health management programs to control costs.

  • Looking to 2014, employers anticipate increase costs to cover more employees, as it's anticipated fewer employees and dependents will opt out of employer coverage because of the individual mandate.

  • From 2012 to 2013, consumer-directed health plans (CDHPs) rose from 16% to 18% of all covered employees, respectively. There are now as many CDHP enrollees as HMO enrollees nation-wide.

  • 6% of larger employers say they will terminate their employee health plans in the next five years in favor of the public health insurance exchanges.

  • The number of small employers that say they are likely to terminate their health plans in the next five years increased from 22% in 2012 to 31% in 2013.

Source: Mercer National Survey of Employer-Sponsored Health Plans 2013

Chart Highlights

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Source and more charts here: Mercer National Survey of Employer-Sponsored Health Plans 2013

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Map source: Mercer via Business Insurance News.

Survey Methodology

According to Mercer's website, the National Survey of Employer-Sponsored Health Plans is conducted using a national probability sample of public and private employers with at least 10 employees; 2,842 employers completed the survey in 2013. The survey was conducted during the late summer, when most employers have a good fix on their costs for the current year. Results represent about 800,000 employers and more than 105 million full- and part-time employees. The error range is +/–3%. For more information on methodology, visit www.mercer.com/ushealthplansurvey.

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