Seven breakthrough benefit strategies to explore this year 

Changing circumstances can necessitate fast adjustments to health and benefits strategies. Just last year, amidst the Great Resignation and historic levels of inflation, plan sponsors were focused squarely on meeting the needs and expectations of workers. Today, with health plan cost rising at the fastest rate in over a decade, employers are refocused on cost management. But despite average cost increases of more than 5% -- with some plans seeing double-digit increases -- employers have little appetite for cutting benefits as a way to curb cost increases. For one thing, labor shortages persist in a number of industries. For another, many employers have committed to improving healthcare affordability and filling gaps in benefits that lead to health disparities. Balancing these two priorities – reining in cost growth while continuing to enhance health program value -- will be the central challenge for 2025 and beyond.

Navigating a complex environment

The effects of higher wages and medical supply costs in the healthcare sector, combined with sharp growth in prescription costs, have contributed to accelerating cost increases. Ongoing health system consolidation has reduced competition and purchaser negotiating leverage, adding to cost pressures. The Great Resignation may be over but competition for talent continues; to be an employer of choice, health benefits must offer something of value to everyone.  And addressing specific gaps in care – for mental health, women’s reproductive health, disadvantaged populations and more -- presents important opportunities for a thriving workforce. Employers have made progress – the challenge now is to maintain momentum in the face of rising cost.

7 ideas to jumpstart planning in 2024 and beyond

Given concerns about affordability, tactics like cost-shifting are off the table for many. As cost growth speeds up, employers need to pivot to new ways of managing cost, like steering employees to higher quality, more efficient providers -- even if it means raising their tolerance for the disruption that can cause.  Over the next few weeks, we’ll share our thinking on seven key strategies to help meet the challenges that employers face today. Our metrics for choosing these strategies? For employees, we’re looking for initiatives that address affordability, access to care, and engagement. For plan sponsors, we’re prioritizing programs that are cost-effective, promote positive health outcomes, and support productivity and attraction and retention. Done right, each strategy has the potential to advance all or most of these objectives.

• Take a closer look at where care is provided. We’re seeing more employers willing to steer employees to higher-value providers, especially when there’s an opportunity to prioritize primary care. Primary care may only be 10% of your cost, but it directly impacts the other 90% of plan cost and utilization -- so giving plan members better access to high-performing PCPs matters. Alternative network strategies can be a challenge but keep an open mind when you see our post on this topic.
• Focus on pharmacy, the biggest driver of medical cost trend. Expensive GLP-1 drugs are suddenly flying off the shelf and super-high-cost specialty drugs are hitting the market with growing frequency. This is a “must act now” area.
• Take the Goldilocks approach to point solutions. The only way to get to “just right” is to optimize your ecosystem of vendor partners by focusing on engagement, health outcomes and financial return.
•  Condition-specific management is currently the top strategy deployed by health plan sponsors. Do you have the right programs in place (see “Goldilocks” above) to address the entire spectrum of needs, from prevention to return to work? And what about newer solutions entering the market, such as comprehensive support for people with cancer? It may be time to define, or re-define, your condition-specific focus.
• If ever there was a time to double down on health equity, it’s now. We have better data, more powerful analytics, and we know the issues. This is about taking care of plan members with the greatest need and the fewest resources – who will also be the population most impacted by extreme climate events. Efforts to improve equity will pay off not only in effective heath care spend but also in helping your communities thrive.
•  Measuring quality is not just a concept anymore and it really does matter. New data analytics have made it possible for plan sponsors to pinpoint problems and opportunities. It’s fine to leave it to your vendor partners to execute -- as long as you are an informed purchaser and hold them accountable. We will tell you how to do that.
•  Workers are demanding more flexibility.  Flexible work arrangements have become a central concern, but employers are also looking to provide broader, more flexible benefit options -- from medical plans at different price points and a range of voluntary benefits, on up to a modernized flex benefit plan. Personalizing the employee experience may be the biggest key to attraction and retention and it can have a major impact on productivity as well. 

Not even AI can generate a silver bullet for reining in cost growth while still meeting employee needs and expectations. Understanding what employees most value, being willing to try new approaches and incorporating metrics to assess and drive overall performance will be critical to success. We look forward to delving deeper into each of these strategies over the next several weeks to help you create a roadmap for 2024 and beyond.