We surveyed over 400 health benefit managers across the country to gain insight into market perceptions regarding national health insurance companies, cost trend and premium expectations, as well as priorities with respect to health benefit design heading into 2022. 

Premium Growth Expected to Rise in 2022 similar to trends in 2020/2021. Employee premiums are expected to increase 4.8% in 2022, on average (vs 4.4% a year ago and 5.4% the year prior). The expected increase in premiums y/y incorporates company expectations for next year related to the health status of members given deferred care and incremental COVID costs expected to linger into 2022.

Premiums Expected to Increase Faster than Net Cost Trend, but Impact of Benefit Buydown on Gross Cost Trend Less than 100 bps for Second Year in a Row. Gross Medical Costs are projected to increase 5.4% Y/Y in 2022 (vs an expected increase of 4.7% for 2021 in last year’s survey and a 5.1% for 2020 in the year before that). Benefit buy-down (e.g. offering fewer benefits, higher cost sharing) is expected to reduce employer’s 2022 medical cost trend by 70 bps (vs 60 bps last year and 130 bps the year prior), bringing the expected net medical cost trend to a 4.6% Y/Y increase in 2022 (vs an expected increase of 4.1% for 2021 and 3.8% for 2020). Over the last three years, the spread between premium growth and projected net cost trend has narrowed from 160 bps for 2020 to 70 bps for 2022. The narrowing spread indicates employers are less willing to push costs on employees in the face of a tight labor market and COVID disruptions.

 CVS Seen as Having Marked Net Improvement in Competitive PBM Positioning for 2022. While each of the three major PBMs improved their net competitive positioning according to respondents, the net gain at CVS was outsized. Some 38.9% of respondents indicated that CVS Caremark has improved its competitive positioning heading into 2022, while only 8.4% indicated that its positioning deteriorated. For Express Scripts, 27.4% highlighted improvement for 2022, while 26.5% noted deterioration. Finally, for OptumRx, 18.9% highlighted improvement, while 14.3% noted deterioration.

 Employers Appear More Concerned about Deteriorating Health Status of Employees (Given Deferrals) than about On-going Covid Costs in 2022. More than half of our respondents expect Covid costs to impact cost trends in 2022 tied to Covid-testing, vaccines, therapy, etc. That said, 55% of respondents expect the impact to be ‘modest’ while 7% expect a ‘significant’ cost impact in 2022. Notably, nearly half of respondents (47%) indicated that they are factoring in higher costs related to the health status of their employees in 2022 due to a deterioration of health status. This suggests employee health status may be a bigger factor than Covid costs for 2022, which we would argue is contrast with Cigna’s early 2022 guidance offered with 2Q21 that suggested more COVID costs may linger into next year.