You've seen the WTW stats: Employer health costs are rising exponentially. But have you seen the surprising solutions? Including how one unique employer association is meeting the moment.
Get ready to add more "What It Means" slides to your next employer healthcare cost strategy deck.
At a time when Medicare Advantage plans are responding to higher costs and utilization by pulling back, American's employers are choosing a different path.
"To tackle high prices and other causes driving increased spending, companies are pursuing initiatives that are beyond cost-shifting," says Tim Stawicki, WTW's Chief Actuary of Health & Benefits.
WTW's 2024 Best Practices in Healthcare Survey shows that while nearly half of employers believe that healthcare costs will exceed budget projections, more than half will respond with better plan/network design and other strategies designed to better support their workforce. The June-July WTW survey included 417 companies that employ 6 million employees.
In addition to more WTW survey highlights, this HealthLeaders feature follows the thread of employer cost-control strategies and the unique efforts of one collective — the Association for Corporate Health Risk Management (ACHRM) — to help self-funded employers rethink their funding methodologies.
Employer Strategy 1: Providers over premiums, design over deductibles
Employers project a 7.7% increase in their healthcare costs in 2025 — up from 6.9% in 2024 and 6.5% in 2023. Given these statistics, it's no surprise that 52% of employers from the WTW survey plan to implement cost-control programs. But how they plan to do it is.
The WTW press release notes that "employers are embracing different approaches to safeguard program affordability for their companies as well as for their employees. While focusing on more competitive, cost-effective plan designs to control costs, they are seeking to maintain employee wellbeing." In the WTW employer survey:
- 51% say they'll "adopt plan design and network strategies that steer to lower-cost, higher-quality providers and sites of care"
- Only 34% plan to shift costs by increasing employee premiums
- Just 20% will promote high-deductible health plans (HDHP)
This is an about face from what we've been taught about healthcare cost control, namely that cost increases must be passed to the consumer, whose utilization choices will be guided by high-deductible plans. They often are, but adversely.
As described in We've Got You Covered: Rebooting American Health Care: "The idea is to give patients a bit of ‘skin in the game' so they don't immediately race to the doctor every time they have a sniffle. Or cancer."
"With cost increases reaching a post-pandemic high, companies are concerned about the burden it's putting on their workforces, especially since it affects decisions about insurance coverage and care," WTW's Stawicki notes.
Employer Strategy 2: More direct contracting please
Not that delivering lower-cost, higher-quality care is easy. If it was, healthcare would be solved.
Rather, these steering strategies signal that more employers want to take control of provider networks from their contracted health plans and third-party administrators. In the WTW survey 30% of employers indicate they are exploring narrow networks and another 25% centers of excellence.
Employer direct contracting should put health plans on notice. In fact, 43% of employers plan to require re-bids from their health plans and vendors in their "proactive efforts to control costs over the next two years."
Enter ACHRM, "the only National Employer-Based Association, Think Tank offering alternatives to traditional health insurance carrier health risk management strategies."
The organization is in the midst of its Nine-Pronged 2024-25 Strategic Plan, which includes provider approaches. For example, Strategy 5 calls out the negative impact of hospital consolidation, especially in rural communities. ACHRM's solution is to "launch and advance employer-medical professional partnerships in monopolistic, rural and underserved pilots to improve access to high quality care at lower costs."
Addressing the "multiple layers between physician and patient," including employees and their employers is another ACHRM strategy.
Strategy Spotlight 3: Care for key conditions
A focus on key health conditions is another strategy employers plan to use, including these from the WTW survey:
- obesity and weight management (40%)
- cancer and oncology (34%)
- cardiovascular health (28%)
- women's health (27%) including fertility services
These are but a few of the conditions and strategies employers will focus on to "support affordability and employee wellbeing."
Part 2 of this employer deep dive will focus on GLP-1s, other WTW findings — plus an exclusive interview with ACHRM's CEO Bill Lacy on how self-insured employers can rethink their funding methodologies. Stay tuned!
Laura Beerman is a freelance writer for HealthLeaders.
KEY TAKEAWAYS
With healthcare costs 'at a post-pandemic high,' U.S. employers say they'll focus on benefit design over higher premiums.
What? Is everything we thought we knew about healthcare cost-control wrong? Not quite, but the latest WTW employer survey is cause for optimism.
So are the unique strategies of employer group ACHRM — and on everything from GLP-1s to PBM contracting and self-funding.