The health insurance dilemma: How companies can tackle rising costs and keep benefits affordable for employees.

The pressure to control health insurance costs, while keeping costs affordable for employees, is intensifying for benefits managers. Average annual premiums for both single and family coverage climbed 7% in 2023 ― a big jump from 2022 when there was no statistically significant increase.1
And U.S. employers expect total health benefit cost per employee to rise 5.4%, after plan changes, in 2024 according to the Mercer Annual National Survey of Employer-sponsored Health Plans.2

On average, workers’ contribution toward the cost of the family premium increased a little more than 8% in 2023, reports the KFF Employer Health Benefits Survey.1 That cost could go higher as 23% of employers surveyed said they would raise employees’ contributions in the next two years.1

As organizations face rising health care costs, putting the inflation costs onto employee premiums is not the best approach. It’s about taking a step back and modernizing your benefit plan makeup, so it offers choice, flexibility, and cost containment,” said Casey Fordyce, VP Global Benefits, Fortune 15 company.

What’s causing the jump in costs, and will it continue?

Many factors are and will continue impacting unit costs in health care, which drive higher health benefit costs, including:

Another issue that will impact costs in the coming years is the expiration of health plan contracts with provider organizations. Many plan sponsors had been insulated from health plan cost increases due to the plans’ multi-year contracts already in place with providers. But those contracts are expiring. So, employers are starting to experience the full effect of inflation, and the other factors mentioned above, as contracts are being renegotiated in a different economic environment than the last time.3

Inflation also affects employees’ ability to afford health care, which can force them to pick and choose among necessities like rent, mortgage payments, groceries, gasoline, and health needs. Low-income workers are more likely to delay care,4 which can increase future health care costs. Skipped treatments can worsen conditions. Missed checkups can mean late diagnoses of critical illnesses. Both issues can result in expensive treatments that may have been avoided.

Another reason people skip or delay health care is fear of unknown costs. More than half of respondents in a national survey said they avoided care due to cost uncertainty. With nearly half of Americans managing at least one chronic condition, this is a big concern.5

What to consider when evaluating health plan options

All of the factors impacting unit costs in health care create price unpredictability and ambiguity for employers and employees. Increasing predictability with a health plan offering cost clarity may lower unit costs and the company and members may find opportunities to save.

The price transparency and $0 deductible of the Surest health plan have propelled it to the fastest growing UnitedHealthcare plan. Companies all over the country are realizing the Surest plan’s clear, upfront pricing can lead to improved member decision-making. When members choose wisely, unit costs are lowered, and the company and members keep more money in their pockets.

By searching a health condition or need on the mobile app or website, Surest members can see a choice of care options (health care professionals and sites of care) with prices (copays) clearly listed. Prices are lower for providers evaluated as high-value based on quality, efficiency, and overall effectiveness of care. When members make informed decisions, they may find opportunities to save. And when members have opportunities to save, employers can save as well.

How the Surest plan can save money for employers and members

What’s driving the savings? Members are making good care decisions. Fewer than 8 out of 100 members use the least efficient providers.8 And these quality providers are likely to recommend more efficient treatment paths.

In addition to provider choice, the place of service significantly impacts the costs. Surest data show a shift in sites and types of care resulting in lower costs.

Why costs are so unpredictable

Pricing for the same procedure can vary tremendously depending on where it’s performed. And cost is not linked to quality. For example, Surest has seen average costs for knee arthroscopy and repair ranging from a little over $6,000 to more than $25,000.

Avg. encounter cost by copay quintile
Surest claims incurred and paid Jan – July 2023
An “encounter” is otherwise known as a day-or-stay and includes the surgery and related services.

Most consumers are not aware of the price variability in health care. Actual costs in traditional plans with a deductible are not visible to the member. Surest changed that. The Surest app or website illuminates the cost variances, giving members the information they need to make informed decisions. Choice of care impacts members’ out-of-pocket costs (copay) and what the employer or plan sponsor subsidizes on the back end.

How you benefit from price predictability


The Surest plan not only makes it easier for members to plan expenses, but employers can see a similar benefit. Because the Surest plan has no deductible or coinsurance, there’s less seasonal impact compared to traditional health plans. When members meet their deductibles on high-deductible plans, they typically pursue more health services because out-of-pocket expenses are vastly reduced. But this behavior can increase costs for employers.

The Surest plan helps to flatten the typical late-in-the-year upward cost curve for plan sponsors.

The cost stability offered by the Surest plan has helped large tech company Lumen keep costs steady for members. “Lumen has not increased our out-of-pocket health insurance costs in five years, and our Surest partnership has been a key contributor to that achievement,” said Marina Pearson, VP Benefits and Policy. “During those same five years, we’ve added improved technology, additional quality benefits and greater control over health care costs and care, accomplishments that demonstrate our commitment to retaining and attracting employees to our company.”

The Surest plan not only offers financial benefits to attract and retain employees, it also can help to improve their health.

How the Surest plan can impact members’ health

Surest is a rich plan with no deductible or coinsurance and utilizes a large, national network of providers. These attributes increase access for members. A $0 deductible and members’ ability to see upfront costs before making an appointment may reduce barriers to care. As a result, Surest members use preventive services more often.

Almost two-thirds (62%) of Lumen members said the Surest plan made them healthier ― a sentiment echoed by members at other companies as well. “If my company didn't offer Surest, I'd still be avoiding care. I am healthier on the Surest plan. And I'm really happy my company offers the benefit,” said Fordyce.

The price visibility and care options of the Surest plan have improved members’ decision making and care choices. The effect of these decisions can decrease costs for members and employers, thereby reducing unit costs in health care. When unit costs go down, cost pressures on health benefits are mitigated and can make health care more affordable for employers and employees. A win-win!

1. Kaiser Family Foundation 2023 Employer Health Benefits Survey https://www.kff.org/report-section/ehbs-2023-summary-of-findings/

2. https://www.mercer.com/en-us/insights/us-health-news/health-benefit-cost-expected-to-rise-54-in-2024-mercer-survey/

3. National Survey of Employer-Sponsored Health Plans (mercer.com) https://www.mercer.com/en-us/solutions/health-and-benefits/research/national-survey-of-employer-sponsored-health-plans/

4. https://news.gallup.com/poll/468053/record-high-put-off-medical-care-due-cost-2022.aspx#:~:text=2%2C%202022%20Gallup%20poll%2C%20found,saying%20they%20have%20delayed%20treatment.&text=Each%20year%20since%202001%2C%20Gallup,12%20months%20due%20to%20cost

5. “Healthcare Affordability: Results from a national survey,” Conducted for the Robert Wood Johnson Foundation. 2021

6. Surest 2022 book of business plan sponsors with both medical and pharmacy data within our warehouse; industry 2022 commercial benchmarks and risk adjustment methodology. Risk adjusted for demographics, geography, and disease burden.

7. Comparison of 2022 medical out-of-pocket spend for members who migrated to a Surest plan in 2022 compared to members from the same employers in a non-Surest plan.

8. 2022 Surest book of business. Surest proprietary provider ranking and subsequent member choice.

9. Surest 2022 book of business plan sponsors with both medical and pharmacy data within our warehouse; industry 2022 commercial benchmarks and risk adjustment methodology. Risk adjusted for demographics, geography, and disease burden.

10. Outpatient hospital surgery and ambulatory surgical center.

11. Comparison of members identified as having 12 months enrollment on UHC plan in 2021, and 12 months enrollment in a Surest plan in 2022.