In the Know

Helping Employers Manage Health Benefit Costs

11.27.2017 Shelly Summers, Executive Director, Client Solutions

When pundits and think tanks speak of the need to “bend the cost curve” in health care, they are talking about reducing the overall cost of delivering health care in the U.S.—currently a staggering $3.2 trillion.

But there’s another critical cost curve that hits home more directly for many of us—the cost and quality of employer-provided health benefits.

As these costs continue to rise, employers are attempting to manage the problem by making fundamental strategic adjustments to their human resources approach; for instance, by:

  • Reducing the number of full-time employees on the payroll
  • Re-designing benefits plans to incorporate lower-cost options
  • Asking their employees to share more of the cost

This is a tricky situation for the employer community. Health coverage is a core benefit that employees have come to expect—so there is a real risk of negative impact to the business if you take too much away. On the other hand, most people are reasonable. They understand that the current model is unsustainable—and they would likely be willing to compromise for the overall health of the business—no to mention their own employment situation.

We took a look at what organizations around the country are doing to cope with this new normal—the competing pressure to maintain good health benefits for their workforce while attempting to manage rising costs—and we’ve compiled some ideas you should consider:

  1. Shop Around: We know, it seems obvious, but there may be other plans with similar coverage at lower cost—even much lower cost—so why not start with that? If you don’t currently work with a broker, it might be time. A good broker knows the market and can usually find a right-sized plan for your organization, much more efficiently than you could find it yourself.

You may also have to trim benefits to make the economics work. If so, make sure you know which benefits your employees value and try to cut accordingly. And how do you find out what your employees value? Ask them.

  1. Consider Specialty Pharmacies: In a similar vein, specialty programs can have a big impact on cost savings—like specialty pharmacy benefits. This is where you would require your employees to obtain specialty (i.e. expensive) medications from a dedicated pharmacy that only dispenses that kind of drug. This approach usually reduces medication costs for both employer and employee—and it has the added advantage of connecting your employees with specialty pharmacists who can also dispense knowledge and advice about the medications and underlying conditions.
  2. Increase Cost Sharing: A delicate subject, we know—and potentially difficult to “sell” to your employees. But it must be on the table for discussion—for the sake of the financial health and viability of the entire organization.
  1. Prioritize Wellness and Preventative Care: Look for plans that incentivize preventative care—and include special provisions for helping employees manage chronic conditions. Then make it easy for your employees and their families to stay healthy through education, wellness programs, and a company culture of health and wellness.

Nurse coaching is an approach that has gained tremendous momentum over the last few years. The idea is to help employees proactively manage their health—especially if they have chronic ailments. Nurses offer coaching on proper medication practice, exercise, and diet—as well as prompting patients/employees to see their doctor for regular check-ups and other lifestyle behaviors to keep their condition under control.

Learn how St. Joseph Hoag Health can tailor a workplace wellness program to your employee’s unique needs.

  1. Consider Consumer-directed Health Plans (CDHPs): Done right, such plans can reduce health care costs for both employer and employees—typically through some combination of a high-deductible health plan, paired with a health savings account (HSA) or an integrated reimbursement arrangement (HRA). Flexible spending accounts (FSAs) are often part of the solution bundle, too. It’s all part of a general trend in the delivery of health care towards “consumerism”—in other words, helping people become more engaged and more responsible for their own health care decisions—including spending decisions.
  1. Offer Premium Reimbursement: Instead of providing health insurance, the employer reimburses workers for purchasing their own plan (up to a certain cap). This sensible approach takes advantage of the much higher rate of inflation over the past 10 years in the cost of group health insurance plans versus individual plans. In certain circumstances, the economics really add up.
  1. Embrace Technology: Online appointment setting, patient portals, telehealth, and other information technology innovations can offer lower cost options for routine care. Not to mention enormous convenience benefits for your employees. Mental health care is benefiting broadly from the ability to offer remote consultations which patients can attend from the comfort and familiarity of their own home. St. Joseph Hoag Health is innovating in all of these areas, from our 24-hour nurse help line and eVisit service, to Reserve My Spot, our online urgent care appointment tool.

There are no easy answers to the conundrum of providing quality health care benefits during a time of enormous cost pressures. Some employers have looked at reducing or eliminating other, non-health care benefits that employees might not value so highly; for instance, legal assistance or discounts for local merchants.

Regardless, employers owe it to themselves and their employees to figure out the most equitable and economic solution to this challenge. We hope the above suggestions may help and guide you in that process.

To learn more about we can help your organization manage health benefit costs, please visit our website or contact us at foremployers@stjoe.org.