Employers embracing cost-shifting alternatives
Forward-thinking employers are managing healthcare spending with self-insurance, leaner plan options, stronger program engagement and pharmacy benefit carve-outs, suggests a recent analysis of selected data from Gallagher’s 2017 Benefits Strategy & Benchmarking Survey of 4,226 organizations. Respondents whose group health plan practices were closely studied and tied to talent management include 1,192 midsize firms and 315 large employers.
Midsize employers considered best in class were more inclined to invest in employee wellness (63% vs. 54%) and disease management (45% vs. 31 %) than others of comparable size. Key measures of success include program participation, engagement and satisfaction.
They also were less likely to increase deductibles, copays or coinsurance overall (41% vs. 55%). The same was true in terms of raising employee contributions to health plan premiums (43% vs. 57%). Between low unemployment and a growing economy, more attention is being paid to the impact these moves have on top talent.
“There’s a fear that if you shift too much cost to your employees they’ll go somewhere,” says Bill Ziebell, president of Gallagher Employee Benefits Consulting and Brokerage, who was surprised that midsize firms with 100 to nearly 1,000 employees bucked this tendency.
In addition, large groups are leveraging their scale to keep a tighter lid on their financial outlay. As many as 62% of the companies examined spent less than $10,000 per eligible employee on benefits vs. 42% of their overall peers.
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Gallagher’s recent analyses of its benchmarking data show that a “competitive advantage can be gained by employers who leverage and optimize their compensation and benefit approaches,” according to Ziebell. He describes their top three objectives as attracting and retaining talent, growing revenue and containing operating costs.
Best-in-class employers are embracing overall wellbeing of employees, higher engagement levels, improved benefits communication and multi-year strategies to drive renewals, he adds. Other notable tactics include dependent eligibility audits, carving out services like pharmacy benefits management and surgery centers that are less costly than hospitals.
With regard to the pharmacy area, he applauds greater use of generic drugs and step therapy as key cost-containment levers, along with more detailed PBM contracts that drive cost savings far better than spreadsheets on discounts. “Pharmaceuticals are going to be a significant focus for any adviser to help their clients keep those costs down,” he says.
Ziebell also reports that “everywhere across the spectrum, we’re seeing movement toward self-funding” to control costs, as well as escape community rating and annual rate hikes. One reason midsize employers may offer fewer health plans is the lack of a robust benefits administration system or private exchange to help facilitate more choice, he says.
The biggest takeaway of these analyses for benefit brokers and advisers “is that the employers that are doing the best of the best in terms of balancing cost and retention,” Ziebell explains. “They’re using data to drive their decisions” and employ longer-term strategies manage costs without shifting them onto employees.G