Reality #1: A shift toward cost containment

The events of 2020 created new concerns for employers around managing COVID-19 at the workplace, navigating vaccines and return to work strategies, and the impact of deferred care and lack of preventive care. Other challenges also came to light surrounding health plan affordability and employees need for convenient, easy access to health care.

In addition, although health care costs in 2020 were lower than predicted, the overall increase in health care cost still significantly outpaced workers’ earnings and overall inflation. This, coupled with the significant uncertainty about what will happen in 2021, has left employers struggling with how to contain health care costs while also attempting to solve for the new challenges around affordability for their employees.

According to survey results from Business Group on Health, the top employer strategy to contain costs focuses on digital health care solutions such as telemedicine, with 51% of employers implementing virtual solutions. This is a logical next step in health care, as Americans have become accustomed to the ease and immediate gratification of digital consumerism. Other top employer strategies include targeted specialty Rx strategies and interest in high-touch concierge solutions that aim to help members personally manage their care in a quality and cost-effective way.

On the opposite side, high-deductible health plans (HDHPs) ranked last on the survey, with only 2% of employers implementing full replacement HDHP strategies. Employers focused on talent attraction and retention are moving away from this strategy because of increased concerns around affordability for employees.

Based on our research, we have identified four strategies to address rising health care costs:

1. Pay for value: Review the plan design to ensure that it incentivizes the right behaviors and results, including funding mechanisms and how medical loss ratios may offer a unique opportunity for plan sponsors.
   
   
2. Drive to quality: This is about delivering the right care at the right time in the right setting. From site-of-care solutions, center of excellence strategies, high-performance networks, and everything in between, plan sponsors are trying to drive members to the optimal solution for care delivery.
   
   
3. Personalize the experience: Employees expect personalization and support anytime, and companies using a technology-enabled approach to achieve this are having the greatest success engaging members in managing their own health and well-being.
   
   
4. Start with the basics: Depending on market size, the opportunities to control costs will vary. Focus in on opportunities in funding, pharmacy, stop loss and how to strategically use supplemental benefits to help optimize benefits spend.

To learn more about cost containment strategies specific to your organization, reach out to a local MMA representative to start a conversation.