Insights Into Employers’ Top Ways to Control Healthcare Costs

4984

In January, the Society for Human Resource Management (SHRM) released findings from their annual Strategic Benefits—Health Care survey of HR professionals, which looks at the ways employers are addressing their rising healthcare benefits costs. In 2014, 79% of respondents, indicated they’re very concerned about controlling healthcare costs, and most are still in the process of determining what strategy(s) are most successful for their organization. Their benefits partners, from brokers and payroll providers to health plans and TPAs, are tailoring their various product and service solutions to support employer groups and help them make the most of their plan designs, workforce communications, and of course, each benefit dollar.

Take a look at SHRM’s survey results and explore the resources we’ve suggested for each employer activity. We hope this helps you get up to speed with marketplace trends while assessing your existing strategy—for your employees, your product line, or service offerings.

Educational Resources

For the purposes of controlling the costs of health care, the most popular employer actions reported the SHRM survey were:

 

2014

2013

2012

Provided educational initiatives related to health and wellness

56%

45%

52%

As employers adopt new benefit strategies, such as offering consumer-driven health plans and wellness programs, they’re helping their employees learn new concepts and assume a larger role in managing their healthcare. Companies are focusing on “employee engagement” and leveraging their benefit advisors, health plans, and benefits administration partners to support their workforce through every step of the journey.

Related resources:

Generic Prescriptions

 

2014

2013

2012

Provided lower-cost generic prescription drugs

48%

39%*

50%

According to the Organisation for Economic Co-operation and Development, the United States spends nearly $1,000 per person, per year on pharmaceuticals, 40% higher than the next highest spender, Canada. Drug costs are high in the U.S., and like other medical expenses, these costs are usually passed down to the consumer in the form of copays and deductibles. Prescription drug plans usually have formularies tiered by drug type and cost to help control costs, and generic versions of name-brand drugs almost always save significant amounts of money. It’s no wonder that generics account for 28% of pharmaceutical spending and 84% of drugs dispensed in the U.S., and many employers are getting behind this trend.

Related resources:

Health, Wellness and Preventive Care

 

2014

2013

2012

Created an organizational culture that promotes health and wellness

45%

41%

45%

 

2014

2013

2012

Increased employee participation in preventive health and wellness initiatives

46%

43%

44%

The ACA has prioritized preventive care—the idea is that if people are proactive in their healthcare, getting screenings and regular check-ups, for example, they will reduce their risks of developing (costly) medical conditions and stay ahead of any known issues. Wellness programs, in turn, help participants adopt fitter lifestyles that improve their work performance and reduce medical bills. When taken hand-in-hand, disease prevention and wellness initiatives can create a win-win for employers and their employees, as well as their workplace culture.

Related resources: 

Consumer Driven Health Plans (CDHP)

 

2014

2013

2012

Offered consumer-driven health plans—e.g., HSAs, HRAs

44%

40%

42%

In 2014, this was the most successful activity (19% of respondents) in terms of helping organizations control the costs of health care. Account-based consumer-driven healthcare plans tend to work well with a defined contribution healthcare benefits strategy. They’re at the heart of healthcare consumerism: by getting employees more involved in the management of their healthcare, they’re helping to raise the awareness of medical costs as well as the importance of making educated healthcare decisions.

Related resources:

Health and Wellness Incentives 

 

2014

2013

2012

Provided incentives or rewards related to health and wellness

43%

35%

40%

Health and wellness programs have become popular ways for employers to manage healthcare costs—and some companies are finding that employees are more engaged in their programs when they’re offered incentives or rewards (or even disincentives) for participating or for attaining certain health-related goals. Some companies are also seeing an impact of incentives on their program ROI.

Related resources: 

Employee Cost Sharing

 

2014

2013

2012

Increased the employee share contributed to the total costs of healthcare

40%

39%

52%

In order to maintain employer-sponsored healthcare benefits for their employees, many companies have had to build additional cost-sharing structures into their health plans, passing more of the costs along to covered employees. Offering high-deductible health plans, for example, is one of the ways employers are able to control their benefits spend while providing their workforce with the coverage they need. In 2014, increasing the employee’s share in the total costs of healthcare was the third most successful activity (17% of respondents) in terms of helping organizations control the costs of health care.

Related resources:

Consumer Choice in Healthcare

 

2014

2013

2012

Offered a variety of PPO plans with a range of premiums based on high and low deductibles, co-pay amounts, etc.

40%

Many employers are offering their employees more choice—more plan options—so they can find the right balance of healthcare costs and coverage to fit their needs. PPO plans remain popular for their built-in cost-savings, while the addition of higher deductibles and other employee cost-sharing mechanisms help control the costs for companies and their workforce. In 2014, this was the second most successful activity (16% of respondents) in terms of helping organizations control the costs of health care.

Related resource:

Be sure to see the results of Healthcare Trends Institute’s second annual nationwide survey and benchmark study on employee healthcare benefits, the 2014 Healthcare Benefits Benchmark Study. Our team surveyed respondents in Fall 2014 to help readers better understand the adoption of healthcare benefits, health exchanges, wellness and health management, and other related topics.

Note: Respondents whose organizations provided health care coverage were asked this question. Respondents whose organizations had not conducted any activities to control the costs of health care were excluded from this analysis. Percentages do not total 100% due to multiple response options.

*A combined question on providing lower-cost generic prescription drugs and over-the-counter drugs was asked in 2013 and 2012.

A dash (-) indicates that the option was not asked in the respective survey. 

SHARE THIS ARTICLEShare on LinkedInTweet about this on TwitterShare on FacebookShare on Google+Email this to someone