5 Healthcare Trends to Watch in 2023

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Rising healthcare prices, the economic climate, and lingering effects of COVID are leaving employers wondering how they can mitigate costs while providing effective health benefits for their employees. The Alliance stays informed on healthcare trends, and how those trends will influence the way healthcare is provided and utilized. Read on to learn which trends to watch in 2023 so you can make informed decisions.  

1. Healthcare Cost Trends

The first trend affecting healthcare is rising costs. Healthcare costs are expected to continue increasing in 2023, reaching the highest level to date. According to the US Bureau of Labor Statistics, health insurance prices in September 2022 increased 28% from 2021, outpacing the 8.2% inflation rate.

While the increased percentage may return to near pre-pandemic levels in 2023, future increases could rise at a rate higher than pre-pandemic projections. This is a result of ongoing inflation affecting both general economic inflation and increasing medical costs. Because health plans have already set their rates for 2023, the greatest impact of inflation will likely be felt over the next two years in the form of higher insurance premiums and cost shares. The tight labor market is also discouraging employers from passing costs to employees or decreasing benefits to mitigate cost.

The affordability of healthcare has been a major concern for years. Kaiser Health News and NPR reported 100 million in the U.S. are struggling with medical debt. The National Consumer Law Center stated medical debt causes 62% of bankruptcy filings each year.

A recent study by Deloitte indicates a third of consumers feel they are less prepared to pay for unexpected medical costs than they were a year ago. As healthcare costs continue to increase, people may choose to postpone or forgo necessary care because they are concerned about the expense.  

While healthcare costs will continue to increase in the coming years, there is still a reason for hope. Deloitte released a report on healthcare cost trends, predicting that by 2040, we will begin to see a deceleration of cost trends in relation to gross domestic product (GDP). This projection is based on the prediction that the healthcare industry will shift from treatment-based, reactionary care to preventative care focused on well-being.  

2. Benefit Plan Design Trends

To mitigate rising costs, employers will need to design their benefit plans to encourage employees to utilize high-value care. When employees seek care where quality is high, and the price is low, their employers save money. Employers can then pass those savings along to their employees through incentives like cash rewards.

Providing financial incentives that reward health plan enrollees for choosing high-value healthcare is the most common benefit plan design strategy employers utilize today. One way to incentivize employees to use high-value providers is to create a tiered network. Tiered networks make high-value providers more affordable to plan participants while still providing the option for them to receive care wherever they are most comfortable. Some employers provide free preventative care to encourage employees to utilize preventative services and take a proactive role in their health. This can prevent more costly medical claims in the future.

Employers will continue to add wellness incentives to encourage their employees to utilize preventative care and maintain healthy behaviors. According to KFF, biometric screenings are offered by almost half of large businesses. Of the large employers offering biometric screenings, fifty-seven percent use incentives or penalties to encourage employees to complete the screenings. Health Risk Assessments (HRAs) are also becoming more popular with about half of small and large companies offering HRAs. Among the large businesses providing HRAs, fifty percent use incentives or penalties to encourage employees to complete the assessment.

Employers will continue to expand the mental healthcare options in their benefit plans by adding providers to their networks (both physical offices and virtual providers). KFF stated, most employers recognize the growing need for mental healthcare with thirty percent of large employers stating their networks do not have enough behavioral health providers to ensure timely access to care. Over twenty-five percent of large employers recently added mental health providers to their networks in 2022.

3. Price Transparency Trends  

Price Transparency is one of the trends in healthcare that is expected to increase as more providers comply with regulations. The federal government has implemented rules requiring hospitals and payers to share price and claims data starting January 1, 2021. The initial phase of price transparency is expected to take five years, but many hospitals are already complying. A report from Turquoise Health showed that as of the third quarter of 2022, nearly two-thirds of hospitals are complying with the price transparency requirements. Seventy-six percent of hospitals have published machine-readable files. However, just sixty-five percent have published machine-readable files with negotiated rates, and only sixty-three percent posted machine-readable files with cash rates.

There is currently no established process to analyze and organize price data. The result is an overwhelming amount of data that is not easily accessible or understandable to consumers. Turquoise predicts further government action and third-party innovation are necessary to get all hospitals and payers to comply. Standards should be set for shoppable service packages and machine-readable files.

Hospital price transparency is important for health plan enrollees to be smart healthcare consumers. If people know the prices of services, they can compare prices at different providers and “shop around” for the best quality at the best price. Price transparency also provides an accurate estimate of medical costs and allows people to plan for the expenses of their care.

Currently, most healthcare consumers (64%) do not search for different prices for medical services because, unlike every other consumer industry, price information has not always been available. Even now that price data is being published, many consumers do not know where to look for this information. Without price information, people seek care from providers they are familiar with or referred to.

4. Healthcare Delivery Trends

Changes in consumer preferences, new legislation, and the adoption of technology are trends shifting the healthcare landscape. A report from McKinsey defines the future of care delivery as “patient-centric, value-based, and transparent.”

The national annual healthcare spend is currently over $1 trillion and rising and the focus on health outcomes is increasing. Independent care models, including direct primary care and advanced primary care, will become more utilized as patients demand more personalized care and doctors seek more flexibility. According to a survey from the Business Group on Health, “9% of large employers have directly contracted primary care models in select markets; another 17% are considering it for 2022-2023.” More employers will contract directly with providers as they seek to manage their healthcare costs. Independent infusion centers and pain centers at ambulatory surgical centers (ASCs) will also become more popular because they are less expensive than hospital outpatient facilities.

Accessibility is a pressing concern in healthcare, and virtual care will be a critical tool in improving access. KFF states, ninety-six percent of large companies cover some form of telemedicine services.  Thirty-five percent of large employers say telemedicine will be “very important” in providing primary care and twenty-four percent say it will be “very important” in providing specialty care. Virtual care options offer appointments outside of traditional office hours with some services providing 24/7 access to care and same-day appointments. Accessing care this way can shorten commute and wait times, offering more effective use of time for patients and providers.   

5. Self-Funding Trends

According to a KFF survey, the cost of employer-sponsored coverage remained surprisingly flat in 2022.  Self-funding can be a cost-effective alternative to the traditional fully insured approach. By taking on the responsibility for their employees’ medical and prescription drug claims, employers can reap the benefits of having full control over their benefit plans.

Large businesses are more likely than small and mid-sized businesses to self-insure their health plans. EBRI states, “In 2021, 75.1 percent of establishments with 500 or more workers self-insured at least one plan, compared with 34.5 percent among medium-sized establishments (100–499 employees) and 17 percent among small establishments (fewer than 100 employees).” However, smaller businesses can reap the benefits of self-funding. The Affordable Care Act has influenced small employers to adopt self-insured plans.

As healthcare prices continue to rise, there is an increasing need for employers to be responsible fiduciaries and financial stewards of their health plans both for their employees and their bottom lines.

The Alliance serves as the voice for self-funded employers who want more control over their healthcare costs. Using Smarter NetworksSM and sophisticated data mining and analysis, we provide transparent, creative approaches to network and benefit plan design to unlock savings where others can’t – or won’t.

By working with other partners, including brokers and third-party administrators, and focusing on high-value healthcare, we help to create customized plans and streamlined services. We can help you drive down your healthcare spending while increasing value for your employees using these healthcare trends.

Have questions? Please reach out to us.