Employer healthcare COSTS are expected to rise 5% in 2021

As the benefit enrollment period approaching, employers are in the middle of their discussions with the insurance carriers.  At a time when many small and midsize companies are on the brink of bankruptcy due to the COVID-19 crisis, many large insurance companies are having one of their best years.  The costs associated with coronavirus claims are peanuts compared to the costs they’ve avoided because most states have suspended elective surgeries like hip replacements and cataract removals until 2021.  In addition, the insurance companies got massive support from the government coronavirus stimulus package, the HEROES Act.

Seeing the struggle the employers are experiencing and some easy money the insurance companies are making this year, one may assume the insurance companies will be collaborating with employers on the health costs.  Yeah, right!  They are passing the expected jump in claims directly to employers in the form of health cost increases.

According to the Business Group on Health’s annual survey, the total cost of health benefits is expected to rise 5.3% in 2021.  The increase is slightly higher than the 5% increases employers projected in each of the last five years.  The history repeats itself.  Once again, decade after decade, the growth of the employer health costs is greater than the inflation rate.  For example, the 5-year breakeven inflation rate is currently around 1.5%.

As the enrollment period approaches, the real question is: Why are heads of HR departments and heads of benefits are accepting this bullying behavior from the insurance carriers?  Here is the answer.  First, some HR managers may actually believe that ‘taking to the chin’ from the insurance companies is normal and it’s supposed to be this way.  It’s the cost of doing business.  Second, as the saying in the industry goes, “no head of benefits was ever fired by renewing with Cigna”.  Looking for alternative solutions takes time, generates tons of paperwork and creates ‘unnecessary’ questions from employees.

All these so-called explanations are pitiful.   Let’s be honest and call it as it is.  The CEOs and CFOs have fiduciary duty to their shareholders.  The HR departments have fiduciary duty to their employees.  All of a sudden, they forgot why they took this job in the first place – to benefit employees!  By taking these draconian cost pass-throughs from the insurance companies and automatically renewing the health insurance plans, HR departments are violating their fiduciary duty.  Plain and simple.

I strongly encourage heads of HR and CFOs to take a look at the technology solution created by WellAI to save on healthcare costs.  Your employees would have a cool perk, our version of “Alexa for Health”.  They would have fewer ER and doctor visits, experience state-of-the-art chronic disease management program (if needed) and talk to WellAI-trained telemedicine physicians who are using this super-modern machine learning technology to guide them in their diagnosis.

In other WellAI news, please don’t forget to tune in to an educational show Advancements with Ted Danson on CNBC on Sunday, September 13, 2020, at 2:30pm EST.  This episode of the show will discuss how WellAI is revolutionizing healthcare through innovations in machine learning.  Press release is available here.

10 days to launch!  Please visit https://wellai.health to sign up.  Let me know if you have any questions.

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