Large U.S. employers reported that their health insurance costs rose just 1.9% in 2020, their lowest increase since 1997, due to many plan members avoiding visits to health care facilities because of the pandemic. Many employers in that category — organizations with 500 or more workers — plan to use the money they saved in 2020 to better support and engage employees in 2021, according to the results of the National Survey of Employer-Sponsored Health Plans conducted by Mercer. 

Employers with between 50 and 499 employees reported an overall 6.9% increase in total health benefit cost per employee over 2019, and the cost increase for all employers with 50 or more people was up an average of 3.4%. 

The annual survey included 1,812 public and private employers in 2020. Based on responses from a subset of employers in a national probability sample in combination with a non-probability sample, survey results have been weighted (using employer size and geographic stratification) to represent the approximately 246,000 employer health plan sponsors across the U.S. with 50 or more employees. These organizations employ about 125 million full- and part-time employees.

Selected results for the Great Plains region (Iowa, Kansas, Missouri and Nebraska):

• Total health benefit cost for active employees increased 3.4% in 2020, to an average of $13,054 per employee.  
• Asked about their expected cost for 2021, respondents estimated that if they made no changes to their current plan, cost would rise by 5.6%. However, they expect to hold their cost increase to 3.7% by making changes to plan design and/or plan vendors.
• 73% of respondents offered a high-deductible consumer-directed health plan (CDHP) with an account feature (an HSA or HRA) in 2020.  
• 51% of all employees covered in respondents’ health plans are enrolled in PPO plans, 4% in HMOs, and 45% in CDHPs. The median PPO individual deductible is $1,000.
• The average employee contribution amount for employee-only coverage is $137 monthly for a PPO plan, $119 monthly for an HMO and $105 monthly for an HSA-eligible CDHP.

Large employers typically self-fund their plans, which means they may see costs fall as utilization falls, unlike fully insured employers that pay a fixed premium. This could give them more leeway to help employees in 2021, a Mercer expert said. 

“The need to minimize exposure to the virus and ease the strain on overloaded health facilities caused many people to forgo care this past year, which translated to slower cost growth in 2020,” said Tracy Watts, a senior consultant at Mercer. “Heading into 2021, that’s allowed employers to avoid cost management tactics like shifting cost to employees. Instead, we’re seeing many focus on supporting employees with additional resources to help keep them engaged, productive and healthy during these tough times.”

Despite the strain of working through the pandemic, employees are using fewer behavioral health services than they did last year, the survey found. Mercer’s database of claims information (based on over one million members) shows that from March to May of 2020, the number of individuals with newly diagnosed behavioral health problems was down 25% from the same timeframe last year, despite the likely greater need.

The survey data also indicates that employee behavioral health is an increasingly urgent concern for employers. In the survey, out of 11 possible priorities for employee well-being, behavioral health was ranked first by a wide margin, with 75% of large employers calling it a priority. More than one-fourth (29%) of organizations have already provided managers with formal training to support their employees’ emotional and behavioral health needs, and another 24% are planning to. About one-fifth (19%) say they plan to add programs or services to expand access to behavioral health services next year.

Utilization of virtual care and telemedicine services was low prior to the pandemic; in 2019, large employers reported that just 9% of eligible employees or family members used their telemedicine service at least once. In 2020, however, the utilization rate jumped to 14% within the first six months – by the end of the year it will likely climb still higher. To encourage employees to use telemedicine services, many employers waived copays: Where 82% charged a copay before the pandemic, just 48% did so this summer.

Employers were largely pleased with the performance of their telemedicine provider in terms of customer service and wait time during the pandemic: 74% were very satisfied or satisfied and only 2% were dissatisfied, while 24% didn’t have enough feedback to say. Given the wider adoption of telemedicine during the pandemic, it’s not surprising that 80% say it will play a larger role in their programs going forward. 

“As employers begin to embrace and make space for virtual care to play a larger role in their programs, they’ll need to think about how to incentivize employees to use the right modality for the service they need,” said Jim Green, a local producer and strategist at Mercer. Those services may be delivered through AI, telemedicine, a virtual visit with [an employer’s] provider, or an in-person visit at your doctor, at urgent care facilities or even the ER, he said. “Getting the pricing right for the different levels of care – or even moving to a bundled payment model —  will determine whether virtual care ultimately helps control healthcare cost as well as add convenience.”

The full report on the Mercer survey, including a separate appendix of tables of responses broken out by employer size, region and industry, will be published in March 2021. For more information, visit www.mercer.com/health-benefit-trends.