Employers take a variety of steps to stem health care cost increases and improve employee health

While the health care debate continues in Washington, U.S. employers recognize that no single change will radically transform the cost structure of health care programs. Instead, they are following a strategy of taking many concurrent steps to manage costs.

According to our recent survey, employers’ top three priority changes for 2017 are: 1) increasing employee point-of-care costs by adjusting deductibles, out-of-pocket maximums and out-of-network coinsurance (51%); 2) modifying vendor strategies by expanding wellness programs or changing vendor partners (32%); and 3) adding new provisions to prescription drug plans to encourage appropriate utilization (30%).

76% of employers say curbing pharmacy spend over the next three years is a top priority

Our 2017 Emerging Trends in Health Care survey also found that curbing pharmacy spend will remain a focus for employers over the next three years, with 76% noting this as a top priority.

Employers have learned that building a high-performing health care program requires juggling many things at once. Through careful management of participation, subsidies, and the efficiency of their health care and well-being programs, employers can gain a competitive advantage by keeping health care costs down.

Many of us recall periods of double-digit medical inflation. From a high of nearly 15% in 2002, the inflation rate has decreased over the years, and the expected health care cost increase for 2017 is 5.0% after plan changes. However, compared to CPI, health care trend at these levels is not sustainable.

The broad aspects of employee health care are never-ending. As soon as an employer tackles one challenge, another issue (or multiple issues) emerge as top priorities. For example, despite success managing the cost and utilization of inpatient services or outpatient radiology, employers now must deal with dramatic increases in the cost of prescription drugs in the United States. It’s a complex problem with no single solution and it will continue to challenge employers in the coming years.

40% of employers have already implemented a high-tech enrollment process with decision support

Accordingly, employers have many priorities when it comes to their health and well-being programs. However, improving the overall employee experience with these programs is a priority for nearly all employers (96%) over the next three years. Perceived benefits of improving the employee experience are better employee engagement in health care decisions (89%), increased satisfaction with the health care program (81%), improved appreciation of well-being programs (78%) and direct impact on long-term costs (74%).

Despite the complexity of their short-term cost management challenges, employers are taking decisive action on a number of fronts that will pay dividends in the future. This level of activity is not expected to slow down anytime soon.

Actions employers will take to improve the employee experience of the health care program include:

  • Implement a high-tech enrollment process with decision support. 40% have done so; another 35% are planning to or considering it.
  • Offer greater choice of health plan options and types of benefits. 38% do so; another 26% are planning to or considering it.
  • Improve navigation with health care providers. 30% have done so; another 36% are planning to or considering it.

Actions employers will take to improve the employee experience of the well-being program include:

  • Provide access to a portal for tracking activity and incentives. With the sustained popularity of wearable devices and fitness challenges, online trackers are simple yet effective tools to support well-being initiatives.
  • Routinely ask for employee feedback to enhance program offerings. Don’t wait for formal engagement surveys to connect with colleagues about their experience
  • Personalize rewards for employees who engage in the well-being program. As benefit selection and delivery become more consumer oriented, employers are wise to leverage and promote different platforms that support well-being offerings.
  • Offer access to tools to help households meet their financial goals. Apps and online tools are cost-effective ways to enhance your EVP while supporting financial well-being objectives and retirement readiness.

Effectively managing health care plans requires a multifaceted approach. Because there is no magic bullet, employers are engaging a variety of approaches to improve the value of these plans for their employees. 

Read related infographic: Employers maximize ROI of well-being programs by leveraging technology and employee feedback

About the survey

The Willis Towers Watson 2017 Emerging Trends in Health Care Survey was fielded in January 2017 to determine how U.S. employers with at least 200 employees use and deliver health care programs and services. The 666 employers that responded represent 9.3 million employees, including 6.5 million full-time employees, across a variety of industries.


Julie Stone is North America Leader, Health & Benefits Intellectual Capital and Specialty Practice Integration, based in Parsippany, New Jersey.

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