Employers don’t need to be told their costs to fund staff medical insurance continue to surge—with rises they face this year alone estimated at between 8 percent and 11 percent. But a new analysis warns that business leaders shouldn’t be blaming workers for those hikes—90 percent of which are driven purely by healthcare sector actors boosting their prices.
That finding was the key lesson in the latest annual report by nonprofit research organization the Health Care Cost Institute (HCCI). Its analysis crunched data from 2019 and 2023—the most recent year that full, reliable data could be examined. It determined that healthcare outlays rose by nearly 19 percent, from $5,676 to $6,743, during that period. But nearly all of that “increase in spending was driven by rising average prices,” its report noted.
Employers cost spike, worker treatment barely increases
What’s the basis of that conclusion? It’s partly the HCCI’s finding that employee use of medical services increased just 2 percent during the same period. That limited rise in workers incurring healthcare expenses was dramatically contrasted by what hospitals, treatment providers, drug companies, and sector intermediaries charged.
“From 2019 to 2023, rising prices accounted for $959 (90 percent) of the change in spending,” the report said, comparing those costs with far lower employee use rates. “Utilization decreased slightly from 2021 to 2022 but was flat from 2022 to 2023. Average prices grew each year from 2019 to 2023 with annual growth ranging from 2 percent (from 2020–21) to 7 percent (from 2022–23).”
This Morning
The daily digest for entrepreneurs and business leaders
What’s behind that inflation? Myriad intermediaries, heavy administrative and billing systems, and business-friendly regulation have all fueled the rising costs of the U.S. healthcare system. But continual effort by sector companies to boost profits through frequently unwarranted price increases is an indisputable driver of what winds up being very heavy expenses for employers and workers alike.
Just as bad, they’re often not getting what they pay for.
Recent data from the Organization for Economic Cooperation and Development (OECD) showed that the U.S. spends nearly $14,900 per capita on healthcare. That’s more than double the average $7,371 by OECD member states. Frequently, neither employers nor the 50 percent of American workers covered by workplace medical insurance get back as much in care provided as they shell out for it.
“(D)espite higher healthcare spending, America’s health outcomes are not any better than those in other developed countries,” said a 2025 report by the nonpartisan economic sustainability Peter G. Peterson Foundation. “The United States actually performs worse in some common health metrics like life expectancy, infant mortality, unmanaged diabetes, and safety during childbirth.”