Benjamin Franklin said, “When you’re finished changing, you’re finished.” Almost 250 years later, Ben’s quote is truer than ever. What I mean is, your willingness and ability to keep changing is your market advantage. As I keep a close eye on the horizon for hints at where employee benefit trends are headed, I’ve been drawn to two recent pieces:
- A survey by the National Business Group on Health
- A list of Top 10 Health Care Innovations by The Deloitte Center for Health Solutions
From those articles, I identified four specific trends that will drive massive change in the employee benefits industry in the coming 5 to 10 years.
1. Large employer premiums are increasing at more than twice the rate of inflation
Large employers have been isolated from so much of the fluctuation caused by the ACA. To clarify: they haven’t seen the 20+% rate increases like the individual market. But that doesn’t mean rate increases aren’t catching up.
One of the most notable emploee benefit trends in the survey is that: for the third year in a row, these large employers project a 6% rate increase. They call it “unsustainable and unacceptable,” therefore “controlling health benefits costs remains a high priority.”
This means large employers will make the shift smaller employers have had to make in recent years. Every year (for the foreseeable future) they will seriously consider plan design and cost containment ideas. No employers are immune. Which brings me to…
2. Employers will increase out of pocket costs to combat medical inflation
Plan design changes will continue in the form of cutting benefits and increasing out of pocket (OOP) exposure/costs to keep rate increases at 5%.
The survey also reports “80% of employers cite specialty drugs as the number one cost driver.” My history in Canadian healthcare primed me to watch for this trend. Almost 1 in 3 employers will cut prescription benefits. Non-formulary lists will grow substantially. As a result, we’ve seen increased demand for a prescription savings program paired with insurance plans. This prompted us to add our prescription savings benefit on all freshbenies memberships. This solution doesn’t apply in all situations, but it is of great value when it does.
We can learn from mid-size and smaller companies that have reached substantial OOP levels. When it becomes too much for employees to handle, it becomes a PR nightmare for the employer. Therefore, your role is to advise employers to find other ways to balance OOP costs. We’ve seen many brokers explain freshbenies as a strategy to save employees a few hundred to a few thousand dollars each year in healthcare costs; with no-cost primary care visits by phone/video, specialist consults online, advocates for price/quality transparency, bill negotiation, etc.
3. Telehealth is one of the top cost containment strategies, but…
After seven years of working in the telehealth space, this is the first study I’ve seen report “9 in 10 employers” plan to provide telehealth visits (primary care phone/video consults, including a prescription, if appropriate) for their employees. Here’s where the “but…” comes in: just offering this service isn’t helpful unless it’s delivered in a way that people will use it. Thus, I see employee usage becoming the new issue. For example, most carrier-embedded telehealth programs get just 2% usage; some standalone programs average 10%; our average is 40%, with our best-practice installations seeing consistent 90% usage.
This concern is highlighted in the survey: “Employers’ focus in 2017 is shifting…to optimizing how healthcare is accessed and delivered.” They’re looking for real results from such cost containment promising programs as Telehealth, Centers of Excellence, and ”selective” (shrinking) networks. Employee benefit trends have to change to reflect the needs of employers and employees.
4. Future innovations might become cost containment strategies
One of my passions is looking past the current crop of ideas to tomorrow’s innovations. Sure, Deloitte cited telehealth as one of the top 10 innovations to transform health care, but the next generation is already here: specialty visits online (with physicians, psychologists, alternative medicine specialists, dentists, dieticians, pharmacists, and more).
I’m glad to hear that things like genetic sequencing/immunotherapy, 3-D printed devices, next-gen wearable biosensors, etc. will also attempt to contain costs in the future.
So, I’ll take Benjamin Franklin’s advice, and pass it on to you: embrace the change! If that makes your chest a little tighter and pulse a little faster, take a deep breath and remember that innovation is your friend. Changes in employee benefit trends are here to stay.
Now, tell me your thoughts! What trends do you see driving the industry? Which ideas do you like or dislike? Comment below, or email me at firstname.lastname@example.org.