Future Focused: Trending Health Care Plan Features
The pace of health care cost inflation has remained moderate over the past year, and employers are trying to keep it that way. Rather than continuing to ask employees to shoulder more of the burden, however, many are aiming at longer-term changes in employee behavior, such as fostering a “culture of health” within their organizations.
These insights come from two newly issued reports from a pair of large benefits consulting and insurance brokerage firms, based on surveys conducted earlier this year. Looked at in total, the data indicates that employers are looking less at immediate cost-cutting measures and more at “future-focused” plan features.
One of the future-focused strategies highlighted in Mercer’s National Survey of Employer-Sponsored Health Plans is telemedicine services. Also known as virtual care, the service streamlines delivery of health care services by gathering medical data and offering interaction with health care professionals remotely via apps and the phone.
Among the promises of virtual care service is that patients will be more willing to seek medical attention when it can be delivered conveniently, and this inherent efficiency will lead to better health outcomes and reduced costs. But the study found that, though telemedicine services are widely offered, utilization rates remain low.
Specifically, the proportion of large employers (those with at least 500 employees) incorporating telemedicine into their health benefits — 80% — was up substantially from 71% the previous year and just 18% in 2014. But utilization was only 8% of eligible employees last year, though that rate is up slightly from 7% the previous year.
Other trending enhancements
Here are some additional future-focused health plan design features and their prevalence among the 2,409 employers that participated in the Mercer survey:
- Targeted support for people with chronic conditions, including diabetes and cancer: 56%.
- Expert medical opinion services, which allow employees to get an assessment from a highly qualified specialist on a given medical issue: 51%.
- “Enhanced care management” featuring medical personnel who provide support throughout the entire care episode and help resolve claim issues: 36%.
- Access to “centers of excellence” for complex surgeries and other medical needs, including transplants (25%), bariatric care (14%) and oncology (10%).
These strategies “may take more time to reduce medical costs than greater employee cost-sharing, but in the process they change how plans manage care, how providers are reimbursed, and even how people behave,” according to the report.
And as noted, promoting a “culture of health” was found to be a high priority for many employers. Typical tactics to achieve this goal include providing healthy food choices in cafeterias and meetings, banning smoking on the work campus and building on-site fitness facilities. They also involve offering resources to support “financial health” and “a range of technology-based resources to engage employees in caring for their health and fitness.”
New health promotion strategy
The traditional approach used to motivate employees to embrace better health habits — offering financial incentives — is evolving as well, according to the second study, the annual Willis Towers Watson (WTW) Best Practices in Health Care Employer Survey.
To improve employee engagement in this area, “there is growing emphasis on connecting the workplace environment and leadership involvement to the many aspects of wellbeing,” according to the report. This can translate into workplace initiatives that address employee “physical, emotional and social wellbeing,” it states. Examples may include:
- Flexible work arrangements,
- Paid parental leave,
- Diversity and inclusion efforts, and
- Community support activities.
Regarding more concrete health spending optimization tactics, the report emphasized the importance of “new tools and technology and partnering with innovative companies to improve health care navigation,” including decisions about what kind of medical support is needed.
Pharmaceutical benefit costs, rising faster than medical services, are a high employer priority, both reports found. Many organizations have made strides with proactively managing utilization — particularly of specialty drugs — “[but] significant opportunities remain to adjust plan designs and implement coverage changes,” WTW maintains.
The Mercer survey found that, while the average health plan cost increase for larger employers was 3.2%, overall drug costs grew by 7% and specialty drug costs grew by 12%.
A gap to close
Meanwhile, smaller employers have a gap to close with larger employers in their overall health plan cost moderation progress. This year, the average increase for the under-500 employee group was 5.4%. And yet the average per-employee health plan cost for smaller employers — $12,148, according to the Mercer study — was nearly $1,000 below that of larger employers ($13,018). The disparity largely reflects differences in plan design, however.
And speaking of plan design, the percentage of smaller employers offering a high-deductible health plan (HDHP) jumped to 38% in 2018 from only 29% the previous year. The fact that HDHPs cost small employers, on average, 13% less than traditional PPO plans certainly played a major role.
Although HDHPs are much more prevalent among larger employers (at 68%, by Mercer’s tally), that proportion grew more slowly (from 64%) than among smaller employers. Relatively few (about one in five) larger employers that offer an HDHP do so as their only plan option. Also, 82% of employers that offer HDHPs this year contribute to Health Savings Accounts paired with those plans, and the average employer contribution to those accounts ($694) rose from $653 last year.
The right balance
In a perfect world, smaller employers might be able to rely wholly on future-focused strategies and taper off on shifting more financial responsibility to employees, as many larger employers are doing. But when smaller employers lack the financial cushion to avoid the need for immediate cost-cutting options, their employees would probably prefer having jobs over keeping their health plan contributions fixed. So, find the right balance for your organization in consultation with your benefits advisors.