- Employers expect healthcare spending to increase by 5.5 percent in 2018, up from a 4.6 percent increase in 2017, according to a Willis Towers Watson survey.
The continued rise in costs has turned health cost management as a top employer concern, since higher costs can reduce the affordability of health plans for employees.
However, 92 percent of employers say they will continue to sponsor employee health benefits over the next five years as they deploy robust cost management strategies to defray the financial impact of doing so.
“Cost management of health benefit programs remains the top priority for employers in 2017 and 2018,” said Julie Stone, a national healthcare practice leader at Willis Towers Watson.
“Yet, with rising concerns about affordability, employers are challenged to keep costs low without overburdening employees financially,” she added.
The survey revealed how large and small employers are implementing key cost containment techniques to keep insurance coverage affordable for their beneficiaries.
Encourage employees to use innovative healthcare delivery systems
Employers see mobile, innovative healthcare delivery as an important method for curbing unnecessary healthcare costs.
Around 78 percent of surveyed employers currently use telemedicine consults, and another 16 percent expect to add these options in 2018.
The use of “centers of excellence” within health plans can also help employers hold providers accountable for care before they get paid, and can reduce unnecessary healthcare expenses. About 44 percent of employers in the survey used these centers, and another 33 percent are planning to or considering using centers of excellence by 2019.
Employers also actively relied on the use high-performance networks to only pay for the best possible care for employees without additional fee-for-service costs. Roughly 15 percent of employers currently use such networks, and 36 percent plan to by 2019.
Address health carrier selection based on competitive cost-agreements
A large majority of employers evaluated their health insurance carriers based on three market competition factors over a three year period.
Those factors included a carrier’s competitiveness of negotiated provider discounts (94 percent), competitiveness of a carrier’s network access (94 percent), and the competitiveness of a vendor’s total cost of care (92 percent.)
Employers are taking into account all possible quantitative and qualitative carrier distinctions before choosing one.
Manage pharmacy costs through purchasing strategies
Prescription drug prices can create financial hardship for employers, payers, and beneficiaries.
Around 62 percent of employers currently evaluate their pharmacy benefit contract terms, and another 32 percent plan to do the same by 2019.
Employers have also looked into opting out of their current pharmacy benefits, with plans to seek out new contracts that meet their specialty pharmacy strategies. Sixty percent of employers recently adopted new coverage or utilization restrictions as part of a specialty pharmacy strategy. Another 24 percent of employers plan to, or will consider, doing so in the next two years.
Performance measurement is also helping employers choose the right prescription drug benefits. Roughly 44 percent of employers address drug costs and utilization performance through medical benefits, and 38 more plan to in the near future.
Personalize employee choice and promote employee health engagement
Outside of direct purchasing and measurement cost management, employers realize that giving their employees more healthcare options and more engagement opportunities can promote better health.
Offering voluntary benefits and additional services gives employees more choices about their coverage, which may encourage enrollment in optimized health plans. About 66 percent of employers currently use this tactic and another 20 percent expect to by 2019.
Twenty-four percent of employers currently offer employees digital marketplaces to shop for health options, and 55 percent offer patient-facing health navigation tools.
Analysts at Willis Towers Watson reminded employers that cost-management strategies need to be specifically tailored to the needs of the company and its employees due to variability in beneficiary pools.
“Employers understand that there is no single strategy for success when it comes to healthcare, and it is critical to engage employees through education and communication that will create a win/win,” said Catherine O’Neill, a senior healthcare consultant at Willis Towers Watson.
“The most effective health programs will include a broad range of strategies that encompass employee and dependent participation, program design and subsidy levels, and plan efficiency. The ultimate goal is to offer a high-value plan that manages costs for both employers and employees while also improving health outcomes.”