The shifting state of employer-based healthcare

The recent presidential election has left much up in the air, not least of which is the future of the Affordable Care Act and our larger healthcare system. But, no matter what policies are implemented or repealed under the next administration, one thing won’t change: the majority of Americans — currently 57% of the U.S. population under age 65, or about 154 million people — will still receive health insurance through their employer, and will continue to face rising healthcare costs.

According to a recent study, despite a slower-than-usual rise in premium costs over the past five years, employees are feeling an even greater financial burden. Several factors are contributing to this. While premiums are rising at a slower rate, income growth in most areas of the country is not keeping pace. At the same time, employers, facing soaring healthcare costs, are shifting more costs to employees. Employers are insisting on larger employee contributions for PPO and HMO plans, and are also offering high deductible health plans or consumer-directed health plans — and these trends won’t go away under the next administration.

The Commonwealth Fund reports that more than 85% of single-person health plans had deductibles in 2015, compared with 66% in 2006. The Kaiser Family Foundation has found that nearly one in four of all workers are now enrolled in a high-deductible plan.

Meanwhile, those high deductibles keep getting higher. The average single-person deductible has doubled since 2006, from $714 to $1,541 in 2015. It’s now not uncommon to hear of insured consumers skipping out on needed care because they can’t afford out-of-pocket expenses. Not only is this bad for their health, it’s also bad for their pocketbooks, because costs tend to increase as health conditions worsen. The bottom line: healthcare is eating up a larger portion of both employers’ and employees’ budgets.

Also see: “The 50 biggest benefit brokerages in the large-group market, part 2.”

Employers and employees may feel like these rising costs are entirely out of their control. But while a host of larger market forces contribute to rising healthcare costs, there are ways that both can take control over these expenses.

Workers often spend more than they need to on care. This is either because they don’t know which benefit program is best for them, or they don’t know the cost or quality of care in advance. Or, they don’t know where to find appropriate care, or seek unnecessary or ill-timed care. Conversely, employees often don’t seek out the care they need for chronic conditions or preventative services. This in turn can lead to worse outcomes and more expensive treatment options after a medical issue has progressed to a more serious stage.

The common thread among these issues? Employees don’t have the information they need to make smart healthcare decisions — a responsibility left to them by the rise of HDHPs and CDHPs. Seven out of 10 employees don’t fully understand their benefits, according to a 2015 report by Aflac. Employers can fix this.

This will require a shift in thinking. Companies like Amazon and Netflix rose to the top of their industries by understanding and engaging with consumers — providing them the content they want, when they want it, and in a format they can easily use and understand. Employers, and specifically benefit leaders inside companies, need to adjust their strategies to do the same, understanding that engaging employees to make better health decisions can be no different than using an app to find a movie, given the right tools.

Keys to smarter health decisions
Through our work with some of the largest and most innovative employers in the country, we’ve found that there are three key ingredients to helping employees make better health care decisions: integrating benefits, engaging employees and evaluating engagement in real time.

With employers now offering anywhere from six to 12 benefits programs on average, employees need a simple way to understand and access all their health benefits. Moreover, they need help connecting with the right benefit program. Benefit leaders must understand that their employee population is not a homogenous group; each employee’s needs differ. And to be engaged, employers need to proactively offer them relevant information and personalized communications at the right time. Finally, benefit leaders need the real-time visibility that technology can provide into employee engagement with benefits and programs — rather than the stale, 12-month-old claims data they typically rely on.

There is help available for those millions with employer-based health care: technology that solves these problems exists today. Employers increasingly are using such solutions to personalize and simplify the benefits experience — making employees more engaged health care consumers, and in the process, offering a path to better outcomes for both parties.