November 5

Employers Face Rising Healthcare Costs, But There Are Options

Employers Face Rising Healthcare Costs, But There Are Options

Research shows that large employers are cognizant of the challenges facing their employees.

In a recent survey, large employers in the United States predicted a median 6 percent rise in their health care costs.

According to research by the National Business Group on Health, total coverage costs for their employees are expected to reach an average of $15,375 in 2020, compared to $14,642 in 2019. Participants in the survey said they are covering nearly 70 percent of health care costs, as they did in 2019.

Cost Burdens for Large Employers

While large employers experience an increase in their healthcare coverage costs every year, the increase outpaces inflation, making it an excessive burden on employer costs.

The good news is that employers have often predicted higher increases than they actually experienced. Still, rising health insurance costs present a challenge to both employers and employees.

It’s important to note that only large employers were polled in this survey. Small and mid-size enterprises (SMEs) tend to pay more because they can’t bargain for lower costs with insurance providers. Insurers tend to charge SMEs higher premiums, which in turn are passed to employees.

The Rise of Telehealth

To better manage their costs and address the concerns about COVID-19, more employers are expanding telehealth benefits. This trend emerged before the pandemic but is all the more important now as employees seek telehealth services.

According to NBGH’s research, 82 percent of employers offer virtual mental health services and nearly all cover basic appointments via Telehealth.

Helping Employees Afford Care

Research shows that large employers are cognizant of the challenges facing their employees.

One of the top problems is the sticker shock that some people experience for emergency or out-of-network health care. Increasingly, employers are intervening in these surprise billing scenarios through charity programs and third-party mediators.

Employers are also rethinking provider options, reducing the number of HSA plans, which tend to have high deductibles and incentivizing accountable care organizations and PPOs.

Employees can then choose the care that is best for them — even specialty care — at a more affordable price. Many employers are also negotiating rates on a workforce-basis for primary care, which can help reduce costs.

Sky-High Prescription Costs

The number-one drain on employers’ budgets is the rising cost of prescription drugs.

To cover up to 70 percent of these costs for employees, employers need to implement robust cost-management techniques, such as incentivizing generic options or specialty pharmacies.

According to the NBGH survey, 20 percent of large employers plan to apply manufacturers’ rebates to consumer costs, helping reduce this large portion of healthcare costs.

Conclusion

SMEs can take some pages out of large employers’ playbook.

While they may lack the bargaining power needed to obtain competitive rates, they can expand choice-based healthcare and drug cost management measures to reduce their coverage costs.

Meanwhile, large employers are increasingly expanding their employees’ ability to customize their health plan and obtain care affordably.

With careful cost management techniques, employers can move forward in the new decade with better options for their employees.

Let us know your thoughts in the comments below!

Tags

employee benefits, employee healthcare benefits, healthcare for business, healthcare for companies


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