Job Losses Possible as Rising Health Care Costs Force Large Employers to Cut Costs

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Rising Employee Health Care Costs Could Inevitably Result in Job Cuts

A recent survey by a research group has found that large American employers are looking for strategies to cut rising costs associated with employee health care benefits. The costs arise from the medical and pharmacy benefits provided by employers to their employees.

The survey conducted by the National Business Group on Health (NBGH) has found that large American companies are expecting to see a five-percent increase in health care costs through the fiscal year 2018. The NBGH survey has been conducted on 148 large employers, 79% of which employ 10,000 or more employees.

It is easy to infer that these big corporations may inevitably be reluctant to add new jobs to control their mounting cost burden.

The research group has estimated that the total cost of health care is expected to rise from an average of $13,482 per employee this year to roughly $14,156 in 2018.


The survey has found that employers will be covering nearly 70% of these costs. The remaining 30%, which comes out to be about $4,400, will be borne by employees in the coming year.

The biggest source of expenditure in employee health care plans is specialty pharmacy, that is, high-priced drugs for treating serious illnesses like Hepatitis C. Expensive drugs are the most significant cost burden for employers.

To deal with these rising costs, large employers are found to be adopting new cost-cutting strategies. The survey has found that large corporations are showing a growing interest in employing “Telehealth” services. An increasing number of employers are also opening their own on-site or near-site health centers for their employees. Likewise, demand for Accountable Care Organizations (ACOs) is also on the rise.

What’s obvious from this survey is that employers will feel burdened with growing health care costs in the coming days and the one inevitable response will be to streamline their workforce.

This thesis is supported by an earlier survey conducted by a think tank at George Mason University, which found that health care costs may be driving employers to reduce employee work hours or hire fewer workers.

In a nutshell, it is worth noting for American workers that rising employee health care costs may inevitably result in countless job losses across the country.



Large U.S. Employers Project Health Care Benefit Costs to Surpass $14,000 per Employee in 2018, National Business Group on Health Survey Finds,” National Business Group on Health, August 8, 2017.


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