The balancing act: managing health care costs, affordability, and strategies to attract and retain employees

The struggle for company health benefits leaders is real. Inflation and higher post-pandemic health care utilization are contributing to the biggest projected increase in global medical costs in nearly 15 years.1 This double whammy has benefits managers grappling with containing costs and keeping benefits affordable for employees. Global average cost trend is projected to increase to 10% in 2023, up from 8.8% in 2022.1

Five in 10 insurers cite the underuse of preventive health services as a key medical cost driver, up from 34% in 2021 and 38% in 2022, according to the Willis Towers Watson (WTW) 2023 Global Medical Trends Survey.1 Employers see and expect more chronic-condition management needs and late-stage cancer diagnoses due to missed screenings and preventive care from COVID-19 pandemic lockdowns, reports the Business Group on Health (BGH) 2023 Large Employers’ Health Care Strategy and Plan Design Survey.2

Health care strategy — critical to attract and retain talent

The WTW Survey indicates going into 2024, employers will focus on striking a balance between managing costs and addressing employee wellbeing needs and the competitiveness of the tight labor market.1 The BGH Survey agrees with the focus on well-being. The percentage of employers saying their health and wellbeing strategy plays an integral role in workforce strategy increased from 45% in 2021 to 66% in 2023.3

Organizations can boost job satisfaction, loyalty, employee engagement, and productivity by taking action to improve the health and well-being of their employees, according to the MetLife 21st Annual U.S. Employee Benefits Trends Study 2023.4 Company leaders see health care strategy as critical to their employee retention and talent acquisition efforts as well as supporting business performance and company culture.4

How affordability issues impact workers

Employers are continuing to protect employees from significant health care cost increases by absorbing most of the higher health insurance premium costs.3 Two-thirds of employers are striving to reduce patients’ out-of-pocket costs, and 61% are offering plans with lower deductibles or coinsurance. An additional 21% plan to adopt these strategies over the next three years.3

Affordability for employees is a timely topic. More than 90% of workers say they are worried about inflationary pressures and rising costs, states the MetLife Study. Nearly half of employees (48%) cite financial concerns as the cause of lower mental health, increasing from just under a third in 2022. Fifty-five percent of workers say they’re living paycheck to paycheck, up from 43% in 2022.4

Pay isn’t the only way to support employees’ bottom line. Employers can offer affordable benefits to reduce the cost of things like health care and commuting, Mercer points out in its report: The truth about what employees want — A guide to navigating the hyper-competitive U.S. labor market.5

Health insurance deductibles lead to skipped or delayed care

A health insurance deductible can be a cost barrier for many employees. Among people with a high-deductible commercial health plan, a recent UnitedHealthcare survey found 42% of respondents said the deductible typically causes them to skip or delay care whenever possible.6 Eliminating deductibles and coinsurance to reduce barriers to care and increase affordability is at the core of the Surest health plan.

The Surest plan also enhances affordability by providing members several care options with their costs clearly listed in the app or website. Lower prices indicate providers evaluated as higher-value based on quality, efficiency, and overall effectiveness of care. When members choose lower cost providers, members and employers can save. On average, Surest plan members saved 54% in out-of-pocket costs,7 and employers saved 15%.8

Telehealth and virtual care to manage medical costs

Managing medical costs with telehealth is a growing strategy. Six in 10 insurers globally report the addition of telehealth services was the biggest change they made to their medical portfolios in 2022, up from 37% in 2021.1 Employers believe virtual health holds promise. Virtual primary care services, including a “virtual first” model, are expected to increase from 32% in 2022 to 73% by 2026.3 Telehealth and virtual care models can save money for employers and employees, increase access for underserved communities, and the convenience factor appeals to workers.

“Millennials are totally on the virtual care bandwagon. They expect it,” said Karen Rossbach, Clinical Ops Lead for the Surest health plan. “They don't want to travel to an office or wait weeks for an appointment. They now expect to have asynchronous digital communication with their care team and access to share their medical information with others.”

Rossbach says virtual care models can be less costly and deliver great outcomes either equivalent to or better than services from traditional care delivery. “We found that people who visited a virtual care provider within the last six months had a higher NPS score9 than those who didn't,” emphasized Rossbach. “At Surest, we’re expanding the number and types of providers in our network that deliver care virtually. And we are differentially subsidizing them in the plan to encourage their use.”

This strategy is paying off. The Surest plan had seven times more virtual visits when comparing Surest Doctor On Demand (DoD) 2022 utilization to the 2022 DoD book of business.10

What employees want

The MetLife study reports employees want affordability, access, and options. Employers are recognizing that different employees have different benefit needs and a one-size-fits-all approach may not be optimal. As the workforce continues to diversify, a flexible approach to benefits will become more important.4

Taking care of an increasingly diverse workforce requires understanding how the needs and circumstances of different populations have changed. The Mercer Global Talent Trends Report 2022-2023 indicates 85% of HR leaders recognize the need for hyper-personalization to ensure benefits attract and retain talent.11 Employees are especially drawn to benefits that can be customized to meet their personal needs.11

The Surest app or website offers members several choices to take care of their health concerns. “If you see this health care provider for this treatment at this location, here is the price. No guesswork. The Surest app also informs you about other available options along with their prices. The app even displays insight into how others addressed a similar care need,” continued Rossbach. “Surest is all about choice. You can choose to go to an in-person visit, or you can choose to save a couple of hours and see a provider virtually.”

A look ahead

The Fast Forward: Employer Views on the Future of Benefits survey from insurance and financial services trade association LIMRA and EY reports three-quarters of employers believe employees will expect a wider variety of benefit options five years from now. And 73% envision modifying their benefits packages in response to shifting employee demographics.12 These plans are likely driven by the perception that in the future, new hires will require more benefits, and generous offerings will be necessary to compete for top talent.3

A strategic approach to creating a benefits package that aligns with what workers want can help companies prevent employee turnover and attract new employees in the competitive job market. Employer-sponsored coverage that includes options and resources to customize and personalize benefits along with opportunities to save money can help position companies for success when it comes to talent acquisition and employee retention.

1. Willis Towers Watson 2023 Global Medical Trends Survey. https://www.wtwco.com/en-us/insights/2022/10/2023-global-medical-trends-survey-report

2. Business Group on Health 2023 Large Employers’ Health Care Strategy and Plan Design Survey. https://www.businessgrouphealth.org/resources/2023-large-employers-health-care-strategy-survey-intro

3. Business Group on Health 2024 Large Employer Health Care Strategy Survey. https://www.businessgrouphealth.org/resources/2024-large-employer-health-care-strategy-survey-full-report

4. MetLife 21st Annual U.S. Employee Benefits Trends Study 2023. MetLife 21st Annual U.S. Employee Benefits Trends Study 2023. http://www.metlife.com/workforce-insights/2023-employee-benefit-trends/

5. The truth about what employees want — A guide to navigating the hyper-competitive U.S. labor market. https://www.mercer.com/en-us/insights/talent-and-transformation/attracting-and-retaining-talent/the-truth-about-what-employees-want/

6. 2023 UnitedHealthcare Consumer Sentiment Survey was conducted Aug. 2-4, 2023, using Engine INSIGHTS CARAVAN® online survey of 1,005 U.S. adults 18 and older. The margin of error was plus or minus 3% at the 95% confidence level.

7. Surest self-funded 2022 book of business plan sponsors with at least 12 months of incurred experience in 2022 and both medical and pharmacy data within our warehouse; compared to matched comparison groups from a nationally representative commercially insured database matched by gender, age, urbanicity, and zip code using exact matching. 141_V03

8. Combination of modeled and actual results across Surest prospects and clients; Independently developed benchmark based on a database containing healthcare claims from 80 million U.S. lives risk adjusted for demographics, geography, and disease burden. 13_v02

9. Net Promoter, Net Promoter System, Net Promoter Score, NPS and NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

10. Surest Doctor On Demand (DoD) 2022 utilization compared to 2022 DoD book of business. 46_V04 152022 Surest book of business. 131_V03, 125_V03.

11. Mercer Global Talent Trends Report 2022-2023. https://www.mercer.com/insights/people-strategy/future-of-work/global-talent-trends/

12. Fast Forward: Employer Views on the Future of Benefits, LIMRA/EY, 3/17/22. https://www.limra.com/en/research/research-abstracts-public/2022/fast-forward-employer-views-on-the-future-of-benefits/

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