Employers expect health benefit costs could rise an average of 5.4% per employee next year, a recent survey by Mercer found.

The anticipated 5.4% rise is higher than the 3% to 4% typical for over a decade but still not as h🐻igh as the jump in 2001, wh🐲en health benefit costs per employee shot up to 6.3% following the COVID-19 pandemic, according to Mercer.

Rising prices and labor shortages in the healthcare industry likely played a role in driving healthcare costs up, Mercer suggested. Consolidation and “the introduction of ultra-expensive gene and cellular therapies” may have also contributed, along with the surge in popularity of diabetes and obesity drugs. 

However, many employers are choosing to cover those extra costs themselves rather than 🐻passing them on to employees in 2024, in part 🌌to attract and retain workers, responses indicated. 

“Many employer plan sponsors have chosen to absorb cost increases in recent years rather than ask employees to pay more out of pocket for healthcare. This also contributes to faster health plan cost growth,” said Sunit Patel, Mercer's chief actuary for health and benefits, in a release.

The report noted that “enhancing benefits to improve attraction and retention” was the top strategic priority for corporate respondents amid a tight labor market, ahead of cost-cutting measures.