Skip to main content

How the Limits of Affordability Will Influence Healthcare in 2021 and Beyond



The affordability of healthcare for individual consumers continues to be one of the biggest issues facing employers and employees. The total cost of care has increased over the years, and payroll deductions, out-of-pocket costs and deductibles have all risen steadily, as well. For many individuals and families, these costs now surpass what they have access to in savings. Bankrate’s research found that only 39 percent of Americans have enough in savings to cover a $1,000 expense, yet many people have deductibles of that much or more.1


Employers increasingly need to consider cost-management strategies to maintain the value of their healthcare programs without further shifting costs to employees. We’re reaching the limits of affordability, and forward-thinking employers are rethinking traditional healthcare plan models to find new ways to keep costs down.


Here are a few things employers will need to keep in mind going into 2021.

The Impact of Healthcare Costs on Household Finances


Projected out 10 years, healthcare is expected to be one of the highest household expenditures for the average U.S. wage earner, second only to housing.2 Many individuals are not financially prepared to pay those costs, with little disposable income to pay for unexpected bills. Four in ten people would have to borrow to afford an unexpected expense of $400+3, and the average individual deductible for employer plans is now over $1,500.4


As healthcare costs have gone up, utilization of health services has gone down. In a recent survey, 64% say that they have avoided or delayed medical care due to costs.5 There is some concern that high deductibles are discouraging employees from using health services. The 2017 Consumer Health Insights Survey by McKinsey found that 20 percent of consumers reported they do not receive all of the care they need, with three-fifths of those citing cost as a prohibitive factor.6 This trend could lead to poorer health outcomes overall.


Given these trends, employers need to identify new opportunities to manage the total cost of healthcare. Many employers are taking steps such as seeking ways to ensure that employees use existing programs as effectively as possible and see the right providers when it comes to cost and quality.

Rethinking the Employee Experience


The turn toward consumerism — asking or requiring patients to become wholly involved in their healthcare decisions — has been a driving force of employer healthcare strategies for the last decade or more. But many industry experts are rethinking the way we apply these concepts to the employee experience.


Many employers are encouraging employees to enroll in high deductible healthcare plans (HDHPs) and health savings accounts (HSAs).  This consumerism strategy provides employees with a direct financial incentive to help control healthcare costs, especially when combined with self-service support like provider cost transparency tools. Companies aren’t focused enough, though, on the overall experience their employees have when it comes to providing guided support for this decision making process and offering the right tools and live guidance to support a highly personalized experience.


The reality is that healthcare in the U.S. is highly complex and often involves making emotionally fraught decisions and compromises under financial constraint.  Employers that create hightouch, tailored experiences can help employees make smart choices about health services. Providing expert, person-to-person navigational support for employees dealing with this confusing world can help create better outcomes, often at lower costs for both employees and employers.


Rethinking the employee experience also means rethinking the role of technology in creating a highly personalized, hyper-relevant experience to connect people with programs and services as they need them. Employees increasingly expect digital tools to be a part of their healthcare experiences. Individuals who are faced with complex decisions and ongoing health issues need a care model that combines tech innovations with more supportive patient experiences to help people play an active, engaged role in their care decisions.


Optimizing Provider Cost and Quality


Employers have to pay attention not just to the bottom line of healthcare costs but also to how the variation in provider cost and quality – down to the specific location and procedure – impacts cost and healthcare outcomes. Historically, employers have focused on network provider discounts to assure they are getting the best deal on provider costs.


But shifting member utilization to the best providers within a network based on cost and quality has the potential to both reduce spend and improve outcomes. Our research indicates that differences in providers can lead to savings of more than $10,000 for a knee replacement, for example, if employees are steered from high cost to low-cost hospitals with the same or better quality. The next wave of localization in healthcare means employers will need to embrace market-specific approaches to providing quality, cost-effective care.


The limits of affordability mean that employers will increasingly play a key role in managing the total cost of healthcare for their employees. Employers need to consider how to guide employees to the best providers based on cost and quality outcomes for specific services and procedures. Robust and actionable data about these variations in cost and quality is available to employers, as are the resources needed to proactively guide employees to the best providers for their individual situation - potentially improving outcomes while saving a significant amount of money for both employers and their employees.


The next wave of localization in healthcare, driven by increased access to data, creates opportunities for employers to guide their employees’ decision making about healthcare consumption in ways that will optimize both care and costs.


For more insight into the topics discussed in this piece, please reach out to your Aon representative or




Sources:, Jan 2018.


2 Bureau of Labor Statistics, “Employer Costs for Employee Compensation;” Bureau of Labor Statistics, “Consumer Expenditure Survey;” and CBO “Budget and Economic Outlook: 2014 to 2024.”


3Board of Governors of the Federal Reserve, Report on the Economic Well-Being of U.S. Households in 2017, May 2018


4Kaiser Family Foundation, 2018 Employer Health Benefits Survey, Oct 2018


5CarePayment, Feb 2018


6McKinsey, Healthcare Consumerism 2018: An Update on the Journey, July 2018