October 3, 2016
What changes should you expect to see in employer-provided health plans this year, and what are employers planning for 2018 and beyond?
The Challenge of Healthcare Benefits
With over half of U.S. companies seeing a 5% increase in healthcare costs this year—and a quarter seeing increases of 10% or more—employers are caught between the proverbial rock and a hard place. They must contain healthcare benefit costs while continuing to attract and retain the best people. As a result, companies continue to explore new methods of healthcare cost control that also provide meaningful value to their employees.
A Shift in Tactics
As recently as 2015, employers focused on straightforward solutions like cost-shifting to employees or switching health plans. Going forward, they will be concentrating on providing affordable value-based healthcare to their employees.
This year, their attention is on telemedicine, which nearly a quarter of U.S. companies have added to their health plans due to lower cost and greater employee convenience. Thanks in large part to consumer demand for mobile healthcare solutions, the market for telemedicine is expected to grow from $570 million in 2014 to $2.8 billion in 2022.
Narrow networks plans, which offer affordable care from a small pool of the highest-quality providers, are also growing in popularity with employers. While only 18% of U.S. companies use narrow networks today, 27% expect to within the next two years.
A growing proportion of employers (15%) are pinning their future hopes on a new strategy: defined contributions. As the name implies, it means employers will provide a lump sum to their employees so they can find and purchase their own healthcare benefits. It gives a new meaning to consumer-directed healthcare, as employees will be buying their own health plans with company money.
What it Means for Your Organization
Telemedicine and narrow networks mean providing high-quality care in the most convenient manner possible. Creating a virtual division of your medical practices will provide return on investment through insurance-reimbursed telehealth and greater patient satisfaction.
Under defined contributions, consumerism will take on added meaning for your organization. Consumers will now decide how to spend employer healthcare dollars. How should you respond? First, you will need to participate in insurance networks that provide the most appealing benefits to your target patient populations. Second, prior to annual enrollment time, you will need to educate current and potential patients about your physicians’ credentials and experience, the value-added services you provide, and which health plans you participate in. Many employees will now have more choice when selecting a health plan, and they will need help with their decision.
Employers have switched their healthcare cost control focus. They are offering innovative cost-effective solutions that provide added value for their employees. Follow their lead with your consumer focus.