Balancing act: Employers juggle employee needs and future healthcare costs

Employers considering narrowing their network of higher-quality and/or lower-cost providers

Balancing act: Employers juggle employee needs and future healthcare costs

More than half (60 percent) of employers across the US are actively working to strike a balance between managing healthcare costs and meeting their employees' needs, according to WTW’s ‘2023 Best Practices in Healthcare Survey.’ Sixty-two percent of employers are working on initiatives to address their employees’ concerns, all while balancing cost considerations and talent retention in their health and well-being strategies. 

The survey shows that over two-thirds (69 percent) of employers are focused on managing the costs of their healthcare plans. This comes in response to a projected cost increase of 6.4 percent for the next year, compared to the six percent increase experienced this year.  

Additionally, 63 percent of employers are keen on improving their mental health and emotional well-being programs. They are also focused on improving the employee experience (40 percent); communication (38 percent); diversity, equity, and inclusion (37 percent); and employee affordability (34 percent).   

As companies face steep healthcare cost increases, they are not losing sight of the importance of addressing employees’ needs,” says Courtney Stubblefield, managing director for health and benefits at WTW. “However, it’s not a simple challenge for employers to navigate. Each employer needs to find the unique portfolio of programs and solutions that will best control its costs while meeting the healthcare and specific needs of its organization.” 

Improvement through vendor relationships 

The survey says that employers are actively taking measures to manage costs and enhance affordability through health plans and vendor relationships. While 37 percent of employers are currently implementing cost-reduction programs or engaging vendors, 50 percent are planning or considering doing so within the next two years. Additionally, 47 percent are contemplating putting vendor/health plans out for bid, although fewer than one-third (32 percent) have done so thus far. 

To control costs at the point of care, almost a quarter of employers (24 percent) are considering offering a narrow network of higher-quality and/or lower-cost providers in the next two years, while 19% are planning to utilize centres of excellence within health plans. Other employers will include carving out specialty pharmacy services (16 percent) and offering plan options that restrict or eliminate out-of-network coverage for non-emergency services (13 percent).   

Employers are also keeping a close eye on prescription drug costs. While only 16 percent of employers currently require employees to switch to biosimilars when available by 2025, 27 percent are planning or considering doing so in the next two years. Furthermore, more employers are planning or considering evaluating and addressing specialty drug costs and utilization paid through the medical benefit (26 percent) and implementing plan coverage exclusions or higher cost sharing for high-cost/low-value medications (14 percent). In terms of anti-obesity medications, 38 percent of employers already provide coverage, while six percent plan to offer it in 2024, and 16 percent are considering doing so in 2025. 

Navigating virtually care strategies 

Employers are also including navigation and virtual care strategies to manage costs and improve the quality and accessibility of care for employees and their families. While nearly half (43 percent) of employers currently offer plan advocacy or navigation solutions, 23 percent plan to do so in the next few years. Moreover, more employers are planning or considering offering virtual primary care through a third party or carrier (18 percent). 

Almost half of employers (48 percent) have engaged or plan to engage with their employee resource groups to address population-specific mental health concerns. Other actions include evaluating mental health networks from a diversity perspective to ensure diverse representation and offering mental health days off. Some employers are still evaluating cost-sharing for mental healthcare.  

Over half of employers (53 percent) have conducted or plan to conduct a mental health parity audit. These audits ensure employers comply with laws and recent regulations, while also providing recommendations for mental health plan design and programs. 

"Aligning business priorities, from workforce transformation to healthcare costs to employee wellbeing, requires a constant evolution of benefit programs, culture, and employee experience.,” says Regina Ihrke, senior director of health and benefits at WTW. “By doing so, companies can alleviate strains on attracting and retaining talent, enhance worker health and productivity, and gain competitive advantage." 

The ‘2023 Best Practices in Healthcare Survey’ included responses from 457 employers and was conducted in June and July 2023. These employers collectively employ 7.3 million employees.