April 2024

Take control of health benefits costs and employee well-being

If you’re anything like most employers, the health of your employees and the health of your company’s bottom line are probably two of your top priorities – maybe even two things that keep you awake some nights. And just when you thought your budget couldn’t get any tighter, you realize the cost of health benefits is projected to rise at least 5.4 percent in 2024 (Mercer National Survey of Employer-Sponsored Health Plans).

What’s driving the costs of health insurance? Inflation, increasing prescription drug costs including the jump in utilization of GLP-1s, gene and cellular therapies, more expensive treatments resulting from deferred care during the pandemic and the prevalence of chronic conditions all have a hand in pushing up the price tag of employee health benefits.

You’re probably constantly analyzing data to ensure your company’s profitability and optimal decision-making. But employee benefits are more than just a line on the budget spreadsheet. While we can’t control the tides of the health care industry, there are some savvy strategies you can employ to keep costs in check while keeping your team healthy and happy.

According to America’s Health Insurance Plans (AHIP) data, 82.5 percent of every health care dollar is spent on prescription drugs, health care providers and services. So, these are expenses that fluctuate – but also present an opportunity for savings. Addressing the rising costs of health insurance benefits requires a multifaceted approach. Here are some strategies you can consider (Take note - a good benefits administrator or broker partner should support you with these!):

1. Wellness Programs: This might be an obvious one but invest in wellness initiatives to promote employee health and prevent chronic conditions. Healthy employees are less likely to require expensive medical interventions. Foster a workplace culture that prioritizes employee health and well-being through initiatives meaningful to your employees, such as ergonomic workstations, flexible work options, mental health support, and stress management programs.
2. Care Management Programs: Case managers and other clinical experts can help your employees focus on preventive care, treatment adherence and managing chronic conditions more effectively. These programs can reduce the need for expensive treatments down the line by keeping employees healthier.
3. Evaluate Plan Design: Periodically review and adjust the design of your health plan to ensure it aligns with the needs of employees while also controlling costs. Work with your benefits partner to utilize health care analytics tools to identify cost drivers, track health care spending trends, and implement targeted cost-saving measures. This might involve considering different plan options, such as high-deductible plans or value-based insurance designs that offer lower copays for high-value services that can encourage employees to make better health care choices.
4. Re-imagine Your Provider Network: Some employers have had great success with direct primary care - partnering with health care providers to create more cost-effective care pathways without compromising care quality. Perhaps you prefer a more traditional provider network – you can still work with your administrator or broker to understand what options best meet the needs of your workforce from a geographic and demographic perspective. You can also offer telemedicine services to employees, which provide more cost-effective and convenient health care options for non-emergency situations.
5. Health Savings Accounts (HSAs) or Flexible Spending Accounts (FSAs): Encourage employees to contribute to HSAs or FSAs to cover out-of-pocket medical expenses with pre-tax dollars, thereby reducing their overall health care costs.
6. Employee Education: You can offer the best benefits in the world but how good are they if your employees don’t know about them or understand how to use them? Provide ongoing education and resources to help employees make informed decisions about their health care options and understand how to utilize their benefits effectively. 

While we can’t stop the rising tide of health care costs, we can certainly learn to ride the wave. By implementing a combination of these strategies, you can work to mitigate the impact of rising health care costs while still providing valuable benefits to your employees.

At Nova, we understand that you want to provide your employees with valuable benefits that fit your budget. Check out From Risk to Opportunity to learn about how we can help you transform your health plan data into strategies to manage your health care spend.