Strategies to Manage Increasing Healthcare Costs

Health care costs have jumped greatly over the past couple of years, showing a large spike of 6.3% in 2021 alone. The cost growth has been sharper for smaller employers compared to larger employers; however, both are causing companies to look for strategies to help keep more money in employees’ paychecks. Employers are looking to implement value-based benefit offerings in the future to allow for reduced out-of-pocket costs for high-value services and increased out-of-pocket costs for overused services. Plans offering personalization are also growing in popularity as they give employers the ability to tailor offerings in a way that also minimizes costs.

The pandemic has also delayed care, making many employers concerned about increased mental health issues among their employees. About 33% of Americans have pushed back care due to increased costs, and these prices have only increased over the past couple of years. Employers also anticipate a 94% increase in medical services due to the delayed care by individuals. Many are beginning to worry about what their health care costs will look like for the future as the current average is $15,412 for employer and employee costs combined. Post-pandemic, costs will only continue to increase due to more mental health needs, chronic condition management needs and late-stage cancers.

There are many factors that have increased the high cost of claims including COVID-19, specialty Rx and gene therapies. The stop loss market has changed greatly, and it will only continue to with an uncertain future. Stop-loss claims provide employers coverage against unknown expenses that may arise to help protect their cash flow. There’s been $13.9M in stop loss reimbursements for COVID-19, making it the 22nd highest cost claim. Specialty medications and expenses have greatly increased over the years, making it essential for employers to offer programs to help with decrease costs. Only about 54% of employers take time to evaluate what givebacks they have available in their medical plans to offset specialty drug and health care costs. With the future of COVID-19 still uncertain, it’s important to make note of how much these claims are affecting employees as the expenses will continue to escalate.

While costs continue to climb, many companies are looking at ways to manage these costs downward by using new strategies that involve things like overall plan design changes, vendor oversight, and chronic condition management. Employers are also reassessing their current role as providers and subsidizers to help control the ever-changing costs within their medical coverage. Many are looking into the types of wellness programs they can provide to help employees with their decisions and assist them in choosing the responsible option. HR professionals will continue to be challenged with creating an environment that provides employees the opportunity to make high-quality, yet cost-effective decisions for their health care.

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ABOUT THE AUTHOR

Alicia Mellish

Alicia Mellish is SVP, Practice Leader, for Assurance’s Employee Benefits department. With more than 10 years of insurance industry experience, Alicia provides leadership and management to the benefits support team to ensure goals are met while maintaining a best-in-class service platform. Her responsibilities have ranged from overseeing compliance and wellness to financial analytics and various benefit technology platforms. Alicia currently serves on the board of the Downtown Chicago Chapter of the National Association of Health Underwriters. She holds a Bachelor of Art’s degree in Communications from Marquette University.