Pandemic tames health care cost growth for some employers

Large U.S. employers saw their smallest health care cost increase in more than two decades due to COVID-19, and workers may benefit from that next year, according to the consulting firm Mercer.

Patients stayed home and out of doctor’s offices this year to avoid the global pandemic, and that led to an average 1.9% cost hike for companies with 500 or more employees, Mercer found in a national survey.

Those employers were expecting a 3.5% increase, said Beth Umland, Mercer’s director of health and benefits research.

The lowest cost increase since 1997 will help many large employers avoid raising deductibles or doing other things to shift costs to workers in 2021, Umland said.

Many companies also will spend some of what they saved adding programs that help improve the health of those covered by their plans. That could include expanding telemedicine, improving access to behavioral health care like therapy or adding programs that help people with a specific condition such as diabetes.

Large employers pay their own health care claims. They can see fairly quickly if costs fall, unlike small employers that pay a fixed premium for coverage.

Those employers may receive rebates for a similar drop in health care use, but they won’t know the extent of that until next year.

Employer-sponsored health insurance covers about 157 million people, according to the non-profit Kaiser Family Foundation.