Employers Clamp Down on Rising Healthcare Benefit Costs

Healthcare benefit costs in the U.S. are expected to rise 5 percent in 2020, and the prediction is prompting large employers to up their efforts to save, according to a mid-2019 survey by the National Business Group on Health.

To lower their costs, 51 percent of the large employers who participated in the survey said they were prioritizing virtual care solutions. Nearly 40 percent were focusing on a strategy for high-cost claims.

The findings come after healthcare benefit costs also rose 5 percent in 2019, following an actual 3.6 percent increase to large employers in 2018. Those costs averaged $14,642 per employee in 2019, including premiums and out-of-pocket costs for employees and dependents. In 2020, that amount is expected to jump to $15,375, with employers covering about 70 percent of costs and employees bearing the remaining 30 percent. 

Seeking virtual & other solutions

In the face of such projections, employers are looking at virtual care as a possible cost-cutting solution, as evidenced by the 64 percent of employers saying it will play a significant role in how healthcare is delivered in 2020. Among the employers implementing virtual care offerings, nearly all plan to offer telehealth for minor acute services and 82 percent aim to offer virtual mental health services. 

“Virtual care solutions bring healthcare to the consumer rather than the consumer to healthcare,” says Brian Marcotte, president and CEO of the National Business Group on Health. “They continue to gain momentum as employers seek  different ways to deliver cost effective, quality healthcare while  improving access and the consumer experience.”

Still, there are numerous challenges for employers to deliver real cost-saving measures on healthcare benefits. “One of the challenges employers face in managing their healthcare costs is that healthcare is delivered locally, and change is not scalable,” Marcotte says. “It’s a market-by-market effort. Employers are turning to market-specific solutions to drive meaningful changes in the health care delivery system.”

In addition to telehealth, employers are focused on reducing pharmacy costs, with particular concern around costly new therapies. In 2020, 20 percent of employers will have a point-of-sale rebate program, with the potential to jump to 60 percent in 2022, the survey found. 

Reservations on Medicare for all 

Despite the rising costs for their employees’ healthcare, many companies are hesitant about Medicare-for-all policies. More than 80 percent thought Medicare for all would increase taxes, while 72 percent said it would lower the uninsured rate. More than half believed such a plan would increase healthcare costs, while 47 percent predicted employees would face higher costs.  

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Source: National Business Group on Health. (August 2019)