Employers and health systems will continue to face labor shortages in 2025
January 10, 2025
This is the second in a series on issues facing employer-sponsored health insurance in 2025. Here is a link to yesterday’s post on rising medical costs.
Summary: Labor shortages will increase health care costs, but will diminish cost shifting to employees.
Job openings outnumber unemployed people
Seasonally adjusted. Source: USA Facts, Bureau of Labor Statistics, December 2023 LINK
Job openings are at historic highs, and many employers are having difficulty filling mission-critical positions. This makes many employers less likely to pass the costs of increasing health care on to their employees.
Health care labor shortages are especially problematic. There is a shortage of over 58,000 primary care doctors predicted by 2040, and physician unions are becoming more common. Although fewer hospitals are using traveling nurses than during the pandemic, many continue to have difficulty maintaining staffing levels. Some obstetricians have left states with abortion bans, and 35% of US counties have no available maternity care.
Shortages of physicians are especially common in rural areas. For instance, there are no psychiatrists in 51% of US counties, and no psychologists in 37% of US counties. There are no ophthalmologists or optometrists in 24% of US counties. Labor shortages in health care decrease access and increase costs.
Implications for employers:
- Employers face pressures against shifting increased health care costs to employees given the tight labor market, making efforts to lower costs even more critical to business success.
- A robust telemedicine plan can address shortages of some types of medical care in rural areas.
- Some medical care cannot be provided virtually, and employers can provide travel benefits for their members who live distant from necessary medical care.
Future posts in this series on issues facing employer-sponsored health insurance in 2025:
Regulation and policy changes could reshape employer-sponsored health insurance
Artificial intelligence will continue to advance in health care delivery and administration
Climate change will adversely impact health and increase health care costs
Mental health and substance use will continue to require employer attention
Infectious disease will continue to pose serious risks