Employers Plan to Step Up Health Benefit Cost Management

Employers expect health care costs to increase by 5.5% in 2018, up from a 4.6% increase in 2017, according to the 22nd annual Best Practices in Health Care Employer Survey by Willis Towers Watson.

In the face of these continued cost pressures, including employee affordability, employers plan to step up cost management strategies over the next three years.

Employers are pursuing a wider array of approaches to reduce health care cost and risk—both through improved program efficiencies and members’ health engagement. These areas of focus will include encouraging patients to use preferred providers for health care delivery, e.g., telemedicine, centers of excellence, and high-performance networks; emphasizing better outcomes and cost savings in high-priority clinical conditions, such as diabetes, musculoskeletal health and mental health; and selecting partners based on their ability to achieve demonstrably improved outcomes, as well as hold the line on cost. Employers also aim to enhance employee engagement by increasing choice of benefit plans, improving decision support, and offering health wearables and mobile apps.

Seventy-eight percent of employers currently use telemedicine for office visits, with another 16% planning to or considering to by 2019. Forty-four percent currently use centers of excellence within health plans, with another 33% planning to or considering to by 2019. And, 15% use high-performance networks, with another 36% planning to or considering to by 2019.

Responding employers select health benefit carriers and vendors based on competitiveness of negotiated provider discounts (94%); competitiveness of vendor’s network access (94%); and competitiveness of vendor’s total cost of care (92%).

As for curbing pharmacy costs and utilization, 62% of employers are currently evaluating contract terms, with another 32% planning to or considering to by 2019. Sixty percent of respondents recently adopted new coverage or utilization restrictions as part of a specialty pharmacy strategy, while another 24% are planning to or considering to by 2019. Forty-four percent of employers address specialty drug costs and utilization performance through medical benefits, and another 38% are planning to or considering to by 2019.

Ways employers are elevating employee health engagement include:

• Add choice in benefit types by offering voluntary benefits – 66% of employers currently use this tactic, with another 20% planning to or considering to by 2019.
• Create a virtual shopping experience at the time of enrollment – 24% of employers currently do this, with another 26% planning to or considering to by 2019.
• Provide decision-support tools for health navigation – 55% of employers currently offer such tools, with another 26% considering to for 2019.
• Encourage the use of mobile apps for condition management or health risk reduction – 19% of employers currently provide this to their employees, with another 28% planning to or considering to by 2019.
• Promote wearable devices for tracking physical activity – 26% of employers currently promote these to their employees, with another 18% planning to or considering to by 2019.

“Cost management of health benefit programs remains the top priority for employers in 2017 and 2018,” says Julie Stone, a national health care practice leader at Willis Towers Watson. “While employers made significant progress over the last few years refining their subsidy and vendor/carrier strategies, many are now looking to other aspects of their health benefit programs in order to improve health and dampen future cost increases.”

Catherine O’Neill, a senior health care consultant at Willis Towers Watson, adds, “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.”

The Annual Willis Towers Watson Best Practices in Health Care Employer Survey was completed by 678 U.S. employers between June and July and reflects respondents’ 2017 health program decisions and strategies. Respondents collectively employ 11.9 million employees and operate in all major industry sectors. Results provided are based on 555 employers with at least 1,000 employees.