After several years of predictable health care cost increases, employers will be facing above average increases in health care costs, driven in part by pent-up demand for medical services. According to the 2023 Large Employers’ Health Care Strategy and Plan Design Survey, 43% of employers have already witnessed an increase in medical services due to care delayed during the pandemic, and another 39% anticipate seeing the same in the future. One condition group in particular—cancer—is fueling employer concern as well. Cancer is now the top condition driving health care costs and trend, as more late-stage cancers are identified and more expensive treatments are becoming available.

Organizations will continue to balance numerous external and internal factors, many of which directly or indirectly impact the dynamics between employees and their employer. Related to this, employers are increasingly recognizing the effect of health and well-being on their overall workforce strategy: 65% of employers see health and well-being playing an integral role in their workforce strategy, up from 27% just 5 years ago.

Employers will continue to invest in health and well-being and view these investments as part of a long-term workforce strategy. There will be challenging decisions in the years ahead relative to affordability, likely leading to a reprioritization of initiatives, new partnerships and collaboration with employees to bring relevant offerings to the workforce, as well as a broader communication effort for employees and their families.

Employers have long been focused on addressing the unique health and well-being needs of marginalized and under-resourced populations within their workforce. Affordability will further impact health equity and access to care in 2023 as health care cost pressures come to bear. To address these issues, employers will continue to focus on Social Determinants of Health (SDOH) through their health and well-being programs, with an emphasis on health care access, finances/income and childcare.

Employers are continuing to address health equity within their diverse workforce by expanding coverage and benefits for neurodiverse populations and transgender individuals. There is also an increased recognition of the importance of making disability inclusion a key part of Diversity, Equity and Inclusion (DEI) initiatives.

Employers have fully embraced multidimensional well-being strategies as a growing body of evidence shows that supporting employees holistically has far greater impact than a singular focus on physical health. Mental health will continue to be a top priority among employers and employees, recognized as inextricably linked to other dimensions of well-being, including physical, financial and social health, as well as job satisfaction.

Recognizing increasing financial pressures, 94% of employers have a financial component in their overall well-being strategy. While retirement savings is still a major part of employer financial well-being, many are helping employees with their day-to-day financial priorities by offering tools and resources to support challenges like saving for emergencies, paying down debt, creating a household budget, gaining early access to earned wages and paying for college.

With rising health care costs, disappointing patient experiences, declining life expectancy and subpar outcomes, employers and others are eager to see more rapid progress in the adoption of value-based payment models. These models tie provider reimbursements to improved patient experience, cost mitigation and improved outcomes. Advanced primary care, high-performance networks (HPN), accountable care organizations (ACOs) and centers of excellence (COEs) are examples of these payment models. The call for value payment and measurement extends to point solutions, as employers seek validation of favorable economic and clinical impact. Furthermore, these models are crucial in both in-person care settings and virtual care. Without widespread adoption of value-based payment models, truly sustainable industry transformation will not materialize.

According to our 2023 survey, 55% of employers will add to their suite of virtual health offerings despite ongoing concerns that virtual health is adding to an already fragmented and complex system. Virtual health is now at a point of reckoning, with a focus on rationalization in the market, a heightened need for integration with in-person care and high-quality solutions resulting in improved outcomes. Therefore, 2023 could bring a time of transformation for virtual health as employers, vendors and consultants work together to better integrate virtual health offerings to improve the overall employee experience as well as outcomes.

As governments around the world evolve their strategies to address their population health and well-being needs, employers will continue to be impacted. Governments will look to employers for support and resources to communicate and facilitate public programs as well as, in some cases, provide coverage and services directly or in partnership. In light of global economic volatility, persistent health care needs, increasing costs, provider shortages, and introduction of new, expensive medical and pharmaceutical treatments, we expect employers will need to stay engaged in civic discourse to understand and help define their involvement and responsibilities.