2023 Health Care Trend Report

Employee Benefits

Organizations of all sizes offer health benefit plans to attract and retain top talent, improve employee engagement, and satisfy their compliance obligations. Yet, staying current on benefits trends can be daunting due to the complex and fluid nature of the health insurance market. It is important for organizations to understand the latest developments in the marketplace to make informed decisions about which plans to offer.

The 20th annual M3 Health Care Trend Report examines health benefit plans and demonstrates actual trends in the market. The report provides readers with an overview of cost, trends and how plans are designed.

In this audio recording, Jeff Christensen and Brian Meyer share how M3’s 2023 Health Care Trend Report tees up a deeper strategy around your organization’s benefit plan offerings.

How does your organization’s plan compare to the market? Is the structure, cost and plan design associated with your plan in line with your peers? Review the 2023 M3 Health Care Trend Report to find out.


In 2023, health benefit plan premiums grew at an overall rate of 7.1 percent. This is slightly higher than the historical norm of 6.6 percent since the report began in 2004, but is the highest rate of change since 2017 (7.7 percent). This trend appears to be the result of multiple factors, notably inflationary factors on medical costs and the effects of deferred medical care during the pandemic.

M3 clients experienced an average premium change of 7.1 percent in 2023 compared to 6.6 percent in 2022.

The overall annual average cost per employee increased to $15,290 in 2023, an increase from $14,624 the previous year. The total cost per employee can vary depending on several factors, with the participation of dependent and spousal coverage being the largest non-trend factor.

Get in touch with your dedicated M3 account executive to obtain a custom benchmarking report for your organization!

Employer Categories

Employer Group Size

2023 saw general increases in cost changes among employers of different sizes with mixed trends by category when compared to 2022.

  • Employers with 99 or fewer employees experienced the largest categorical increase at 7.6 percent. This is an increase from 2022’s change rate of 6.9 percent.
  • Groups with employee populations sized 100-249 saw a 6.4 percent increase, which is slightly up from a 6.3 percent rate of change in 2022.
  • Employers with a group size of 250-499 employees experienced the lowest categorical increase of 5.1 percent. This is a decline from a 6.5 percent rate of change in 2022.
  • Finally, employers with 500 or more employees saw an increase of 6.1 percent. This is an increase in comparison to a 4.7 percent change rate last year.

Regional Snapshot

When reviewing overall health plan costs, geography is an important factor. For purposes of this report, we break our current footprint into six regions which have distinct market factors driving cost. The major factors driving cost include network availability and carrier/health plan competition, making each market unique.

Northcentral Illinois

With Rockford at the region’s center, this section of Illinois is largely dominated by fee-for-service health plans. While most employers in the market are fully insured, there is a healthy mix of innovative funding mechanisms ranging from level-funded to self-funded health plans.

In 2023, the market experienced an overall 6.7 percent increase versus the 2022 baseline. The average cost per employee in the market is the lowest in the M3 footprint at $13,335 per employee.

Northcentral Wisconsin

Anchored by Wausau, this market is largely the northcentral section of Wisconsin. It is a unique market for health plans, in that it has a balance of managed care and fee-for-service options. This means employers have options for HMO, POS and PPO plans largely available to them.

In 2023, the average increase came in at 5.0 percent, down from 5.5 percent the previous year. That trend was tempered by the average cost per employee increasing to $18,041 from $17,228 in 2022.

Northeast Wisconsin Market

Defined traditionally as the Fox Valley region, Northeast Wisconsin is a strong fee-for-service market. Most plans leverage either PPO or POS plan types, although provider networks continue to drive innovation to help control costs. The fee-for-service structure makes this market stronger for employers who choose to self-fund.

This market experienced an overall increase of 8.1 percent, which is up from 6.8 percent in 2022. The average cost of $14,819 was up from $13,903 the previous year.

Southeast Wisconsin Market

Including Milwaukee, Fond du Lac and Kenosha, this market is notable for fee-for-service health offerings, notably PPO plans. These fee-for-service agreements pair with several larger-sized employers, making this the most predominant self-funded market in the state.

This year, the average increase came in at 7.9 percent, slightly up from 7.5 percent in 2022. The average cost per employee was $15,083, which is an increase from $14,461 the prior year.

Southcentral Wisconsin Market

Centered in Madison, this market is largely defined by HMO providers who continue to experience territorial growth. These tightly managed carrier networks make fully insured health plans desirable and self-funding less common than in other markets.

In 2023, the market experienced an overall increase of 7.0 percent, which is up from a 6.4 percent change rate in 2022. The average cost of $14,879 represents an increase from $14,146 the previous year.

Western Wisconsin Market

Anchored by Eau Claire, this market enjoys access to a well-rounded variety of plan types. The market is influenced by medical providers based in both Wisconsin and Minnesota.

In 2023, this market experienced an average increase of 7.1 percent, up from 4.8 percent in 2022. The average cost of $17,754 represents a slight increase from $17,405 in 2022.

Please refer to the map for data that is representative of your area, including average price increase, annual costs, employee contributions and more.

Outside WI/NC-IL: 3.9% of all M3 Clients, 3.8% of all M3 Client Full-Time Employees, and 3.1% Public Sector.

Private vs. Public Sector

2023 was the fourth consecutive year in which the public sector rate of change grew slower than those in the private sector. M3 public sector clients experienced an overall cost increase of 5.3 percent compared to 7.4 percent in the private sector.

  • The average private sector annual cost per employee increased to $14,021 in 2023, up from $13,301 in 2022.
  • The 2023 public sector annual cost per employee rose to $20,048 from $19,310 in 2022.

Employers in both sectors appear to be managing the influences of deferred care during the pandemic, an element of increased medical claims. This is coupled with employers appearing to be very resistant to changing much of their cost sharing mechanisms in way that would expand employee-cost sharing. This is likely a reaction to the highly competitive labor market.

High Deductible Plans

For purposes of this report, a “high deductible plan” is defined as being equal to or greater than the current Internal Revenue Service deductible requirement ($1,500) but should not be confused with the statutorily defined “High Deductible Health Plan (HDHP); which is subject to numerous other regulatory parameters and is typically used in conjunction with a Health Savings Account (HSA).

Over the past year, we continued to see a growing number of employers offer high deductible plans. The percentage of M3 clients who choose to offer a high deductible plan rose from 69 to 72 percent. This overall trend appears to be driven by an uptick of adoption of consumer driven plans, medical inflation and employers offering high deductible options to ensure compliance with Affordable Care Act affordability requirements.

Tax Advantaged Savings Plans

The growth of employers offering health benefit plans which meet the IRS deductible requirement for qualifying for HDHP status coincides with an increase in offering tax advantaged savings plans for employees. Offering a tax advantaged savings plan such as a health reimbursement arrangement (HRA) or a health savings account (HSA) with an employer contribution can make these plans more desirable and cost effective for all stakeholders.

  • Employers offering an HSA provided an average contribution to an employee health savings account of $932 in 2023. Private sector employers contributed an average of $796, whereas the average public sector employer offered $1,218. Those dollars are controlled by the employee once they are deposited to the HSA account.
  • Employers who chose to contribute to an HRA contributed an average of $1,911 per employee. Public sector employers contributed an average of $1,638, while private sector employers contributed $2,054 on average. Those dollars can be used by employees for medical costs, but all unused funds are returned to the employer at the end of the year.

Plan Structures

Plan Design

The multi-year trend of employers slowing or even decreasing some employee cost-sharing mechanisms within their health plans continued. Many of these costs are purposefully tweaked to help drive consumer behavior or manage costs.

This year’s highlights include:

  • Deductibles began to move slightly upwards, while maximum out-of-pocket expenses did increase in line with their long-term trend.
  • Private and public sector co-payments for low-cost services such as office visits and maintenance services like prescription drug coverage remained largely stable, whereas those for high-cost services such as emergency visits continue to increase.

The major long-term trend appears to show employers plan design to drive behavior. Including:

  • Office visit co-payments have remained largely stable in recent timeframe. For example, office visit co-payments have averaged #21 on public sector PPO plans since 2018. This trend is common regardless of plan type and sector and extends to other low-cost services.
  • Co-payments for emergency room visits have sharply increased since 2018. For example, private sector PPO plans have seen a rise from $173 per visit in 2018 to $294 in 2023. This trend holds true regardless of plan type or sector.

Employee Contributions to Premiums

Health benefit plan premium costs are typically shared between an employee and their employer. Like many factors, this can vary greatly between sectors. The data shows us the differences.

Private sector employee contributions were as follows:

  • On a percentage basis, private sector employee contributions experienced a decrease for the fourth straight year, falling to 25 percent for single coverage and 31 percent for family coverage (the corresponding values in 2022 were 26 and 34 percent, respectively).
  • On a dollar basis, this was reflected with minor changes in monthly dollar premium contributions to $177 for single coverage and $667 for a family plan (compared to $172 and $673 in 2022, respectively).

Public sector employee contributions were as follows:

  • On a percentage basis, public sector employee contributions saw a decrease. The percent contribution for single and family coverage decreased to 12 percent (both down a percent from 2022).
  • The amounts on a dollar basis reflected the percentage results, as public sector monthly dollar premium contributions were $99 for single coverage and $245 for family plans (compared with $100 for single and $248 for family coverage in 2022).

This year’s changes appear to reflect the observation that employers, regardless of sector, are generally holding or even decreasing the line on employee cost-sharing in the way they structure their plan design. This appears to correlate to employers meeting the pressures of the market which started during the pandemic and continue during the current tight labor market.

Final Thought

In the past year, employers seem to be focused on ensuring the health plans they offer to employees retain their quality as they navigate the labor market. This means holding the line on employee costs, while attempting to ensure their plans retain their financial stability. The concerns about costs associated with inflation and deferred medical care caused by the pandemic remain.

We encourage you to discuss the report with your M3 account team who have access to benchmarking tools to help inform a conversation regarding your unique situation.

The 2023 Health Care Trend Report, provided by M3 Insurance, is based on data from its clientele which consists of 2,787 distinct benefit plans among 1,311 employers. Most of these employers are based in Wisconsin. Firms range in size from three to more than 10,000 employees. The study sample includes roughly 75 percent private sector businesses and 25 percent public sector entities. The data provided in the 2023 Health Care Trend Report is based on plan information as of May 2023.

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