Strategies employers are using to manage health care costs

Employers expect to step up their health care cost management strategies over the next three years, as their expenses are expected to rise by 5.5 percent in 2018, up from a 4.6 percent increase in 2017, according to the Willis Towers Watson 2017 Health Care Employer Survey.

“While employers made significant progress over the last few years refining their subsidy and vendor/carrier strategies, many are now looking to other aspects of their health benefit programs in order to improve health and dampen future cost increases,” says Julie Stone, a national healthcare practice leader at Willis Towers Watson.

“Over the next three years, they will seek to improve patient engagement, expand the use of analytics, and efficiently manage pharmacy costs and utilization,” Stone says. “Yet, with rising concerns about affordability, employers are challenged to keep costs low without overburdening employees financially.”

Employers will increasingly encouraging their workers to use preferred health care providers, such as telemedicine, “centers of excellence” within their health plans and high-performance networks.

Indeed, 78 percent of employers currently use telemedicine consultations, with another 16 percent planning to or considering to by 2019.

Nearly half (44 percent) of employers currently use centers of excellence centers, with another 33 percent planning to or considering, and 15 percent currently use high-performance networks, with another 36 percent planning to or considering.

Employers will also be demanding better outcomes and cost savings in the treatment of prevailing conditions within their workforce, including diabetes, musculoskeletal health and mental health. And they will increasingly choose partners that have track records of achieving improved outcomes and cost savings.

Specifically, employers will select carriers vendors based on competitiveness of negotiated provider discounts (94 percent); competitiveness of vendor’s network access (94 percent); and competitiveness of vendor’s total cost of care (92 percent).

Other key findings of the survey include the following:

  • 62 percent of employers are currently evaluating pharmacy benefit contract terms, with another 32 percent planning to or considering to by 2019.

  • 60 percent recently adopted new coverage or utilization restrictions as part of specialty pharmacy strategy, with another 24 percent planning to or considering.

  • 44 percent address specialty drug costs and utilization performance through medical benefits, with another 38 percent planning to or considering.

  • 66 percent currently add choice in benefit types by offering voluntary benefits, with another 20 percent planning to or considering.

  • The survey also showed that despite uncertainty about the future of health care legislation, employer confidence in offering employee health care benefits has reached its highest level since the passage of the Affordable Care Act in 2010. Ninety-two percent of employers said they are “very confident” their organization will continue to sponsor health benefits in five years.

The Annual Willis Towers Watson Best Practices in Health Care Employer Survey was completed by 678 U.S. employers between June and July. Results provided are based on 555 employers with at least 1,000 employees.

  • 24 percent currently create a virtual shopping experience at the time of enrollment, with another 26 percent planning to or considering.

  • 55 percent currently provide decision-support tools for health navigation, with another 26 percent considering.

  • 19 percent currently encourage the use of mobile apps for condition management or health risk reduction to their employees, with another 28 percent planning to or considering.

  • 26 percent currently promote wearable devices for tracking physical activity, with another 18 percent planning to or considering. Call us 616-233-9050 with further questions.

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