Decades of Battling Healthcare Affordability

Employers across the globe have been battling the rising costs of healthcare for decades, with employer healthcare costs projected to reach $2.2 trillion by the year 2030. The impact of these rising costs doesn't stop at the employer level - expenses have significantly increased at the employee level as well, leading to larger care gaps and more costly outcomes. As lawmakers, HR teams, and financial officers work for new solutions to combat rising care costs, let's look at some ways that employers can play a part in optimizing plan designs to narrow those growing gaps in care.

The Relationship Between Income and Premium

For decades, increasing costs have had a significant impact on an employee's bottom line, leading some to evaluate their current balance of affordability and healthcare necessity. It is important to identify and be conscious of the financial gaps in an organization's population when it comes to the impact of the financial cost of healthcare on the employee. For workers earning lower wages, the portion of their earnings being allocated to healthcare premiums may not be sustainable. According to a recent report from Centivo, over the last three decades, rising premiums have cost the average worker over $125,000. These earnings lost to rising premiums only adds to a large majority of the population's financial insecurity when it comes to healthcare expenses. In fact, 43% of workers making less than $50,000 annually regularly skip necessary care due to financial constraints. When employees are already contributing a significant amount of their annual earnings on healthcare premiums, the financial impact of additional out-of-pocket healthcare costs oftentimes leads to some forgoing care completely. When considering low-income groups, employers can look for ways to decrease barriers to routine care, such as decreasing costs associated with primary care, virtual visits, or chronic condition management.

An Ongoing Employer Dilemma

Healthcare sponsors oftentimes find themselves facing the dilemma of balancing increasing health plan costs and the need to meet the healthcare needs of employees. For many, the decision between affordability and employee satisfaction includes the collaboration of many groups. For example, an organization's finance team may be more concerned about the impact that certain employee benefits have on the organization's bottom line; similarly, human resources teams will be challenged with determining the value of benefits to employee satisfaction and how they can be used to improve employee retention and recruitment efforts. For finance teams and risk officers, the ROI of these metrics can be difficult to weigh against the overall financial impact of a benefits plan. Since the 2020 COVID-19 pandemic, workers are now twice as likely to consider health and wellness programs as "must-haves" when considering making a job change. In addition, employers may wish to weigh the potential long-term financial impact associated with no longer offering certain benefits, should the overall health of their workforce suffer. The perception of certain offerings from the employee and employer perspective may not be aligned at times, and employers may wish to consider the vantage point of many stakeholder groups before making changes to benefit plans.

Influencing the Trend

Both employers and employees are battling multiple factors influencing the trend of increasing costs. As Americans return to doctor offices, we are seeing more cases of chronic conditions being exacerbated by delays in care. Inflation has also taken a front-row seat to this trend as we see the ripple effects of other industries making their way into the healthcare space, including the rising costs of specialty drugs and their increased utilization, particularly in the diabetes and weight loss spaces. For many employers, cutting programming does not often yield the best results, leading many to search for alternative ways to influence overall costs, such as implementing centers of excellence to target the management of certain conditions including orthopedic, cardiac, and cancer diagnoses. Others may be looking for ways to reduce more costly expenses associated with providers who are outside of the preferred network. Many employers are also seeing success through employee incentives for the use of preventative offerings such as initial primary care visits or biometric screenings, which can ultimately lead to reduced costs associated with later-stage condition management. According to the National Library of Medicine, a patient's initial PCP visit yielded nearly $4,000 in total cost reduction per year on average, with each additional visit yielding an average cost savings of $721.

The ongoing battle of affordability is significant for both employers and employees alike – and every dollar counts! As your organization continues to evaluate benefit offerings and the cost of care, connect with your AssuredPartners team to discuss the value of your employee benefits program and specific strategies that may help manage costs for both employer and employee.