Healthcare premiums rise

For the report, KFF surveyed 24,891 private firms and nonfederal government employers with at least three employees. It received 2,133 responses.

The survey found that:

• The average annual premium for employer-sponsored family health insurance increased from $22,463 in 2022 to $23,968 in 2023. Employees with family coverage contributed an average of 29% of the total cost, while single coverage employees contributed an average of 17%.
• In 2023, workers contributed an average of $6,575 towards the cost of health insurance coverage, and that the average premium for single and family coverage has increased 22% since 2018.
• People working at firms with fewer than 200 employees contributed $2,500 more to their premiums than those working at larger firms.
• 25% of people working at smaller firms contributed $12,000 or more to their premiums every year.
• Nearly 25% of employers said in the survey they plan to increase workers' contributions over the next two years.

"Rising employer health care premiums have resumed their nasty ways, a reminder that while the nation has made great progress expanding coverage, people continue to struggle with medical bills, and overall the nation has no strategy on health costs," said KFF President and CEO Drew Altman.

KFF noted the 7% increase in premiums is near the year-over-year rise in workers' wages and inflation, which were between 5% and 6%. Between 2021 and 2022, annual premiums for employer-sponsored family health coverage increased by 1%.

"We have a huge premium increase this year. There's just no other way to cut it," said Matthew Rae, a co-author of the survey. "There are lots of affordability challenges for employer coverage."

How increased premiums will impact hospital CFOs

A survey conducted by Mercer asked hospital CFOs how healthcare expense ranks as a source of concern compared to other operating expenses. The survey found that 16% of respondents placed it in their top three concerns while 52% placed it in their top five.

Reporting for HealthLeaders Media, Amanda Norris noted four ways the rising premiums found in KFF's survey could impact hospital CFOs:

1. Hospitals will see a financial impact

With premiums increasing by 7% on average, hospitals are likely to see increased costs related to employee health benefits, Norris reports. This could strain hospital budgets, which could affect their ability to invest in other areas.

2. Employee contributions will change

Employee contributions to healthcare premiums will likely increase in the coming years, which could affect employee satisfaction, morale, and retention, Norris reports.

CFOs may need to respond by adjusting their budgeting to accommodate any potential shifts in employee benefit preferences.

3. CFOs should be prepared for budget planning challenges

Since nearly a quarter of employers anticipate increasing workers' health insurance contributions over the next two years, CFOs are likely to face some uncertainty in their budget planning, Norris reports.

Preparing for changes to employee contributions could lead to cost-sharing with employees, which will be critical to hospitals and health systems maintaining their financial stability.

4. The size of your organization matters

KFF's survey noted disparities in employee contributions based on employer size. Hospital CFOs, especially those working in smaller organizations, need to be aware that their employees could be shouldering a more significant financial burden for family coverage, Norris reports. (Choi, The Hill, 10/18; Minemyer, Fierce Healthcare, 10/18; Luhby, CNN, 10/18; Norris, HealthLeaders Media, 10/20)

These ready-to-use slides detail the current trends and major priorities in the employer-sponsored insurance market. The materials are based on Advisory Board conversations with health plan leaders, benefits brokers and consultants, and — more importantly — employer health benefits and HR leaders. Use these slides to guide your conversations about evolving trends in the employer-sponsored insurance market.