As efforts to reconstruct how our country manages health care have come to a standstill in D.C., American companies are increasingly becoming a safe harbor in a never-ending political storm. With government investment in health care and choice in individual markets in danger of dwindling, employer-sponsored health benefits are not only becoming people's best bet for reliable health coverage, but the foreground for driving innovation in health care.

American companies are not new to the task — they provide health coverage for approximately 172 million Americans and spend more than $1.2 trillion on health benefits annually. As employers brace for the cost of providing medical and pharmacy benefits to rise 5% for the fifth consecutive year in 2018, a recent study of large employers conducted by NBGH reveals many benefits teams are increasingly relying on innovative models and products to contain costs and increase the quality of care.

These advances shouldn't be reserved for large employers. Here are three actionable principles that will help any company — regardless of size or stage of benefits strategy — maximize the ROI of their health care spending and produce results that help drive their workforce strategy forward.

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1. Elevate benefits to a C-Suite conversation

Are health benefits something you think about once or twice a year, then trust your HR team to focus on the rest of the time? If so, you're missing a strategic opportunity. Why?

  • The total cost of health care is projected to rise to an average of $14,156 per employee in 2018. We challenge any CEO or CFO to name another major cost center where they have minimal visibility into what it produces and little control of how it drives results.

  • The health of your employees is one of the biggest components of your overall workforce strategy. Turning your health care strategy into a workforce strategy and tying it to your CEO's business priorities — whether that's financial performance such as improving cash flow and EPS, or talent management and retention with a focus on building the healthiest, most productive and engaged employees possible — will put you in a stronger position to influence. Workers' poor health costs $576 billion a year. A benefits program that focuses on keeping people healthy will help insulate you from the rising cost of health care and the high price of sick days, diminished efficiency and disability.

  • Great benefits attract and retain the best and brightest: 75% of U.S. adults say health care benefits strongly factor into their decision of where to work. Benefits are also tax advantaged for both the employer and employee, making them a very strategic lever for creating compelling, robust compensation packages.  

 

2. Take control of your ROI

Many companies have recognized that they're in a powerful position when it comes to their health care dollars. The savviest employers are examining their overall approach to drive value from their health spend. Here's how to get started:

  • Make the move to self-funding. The proportion of companies choosing to self-insure their health plans has continued to increase over the last decade, with the biggest increases in companies with fewer than 1,000 employees. The ability to move from "one size fits all" health plan design to more tailored solutions that optimize your investment around the demands of your unique population are one of the first and most important steps you can take to gaining control.

  • Package your health care strategy with the resources you need to achieve that strategy and deliver a net impact on the bottom line. Ask your benefits lead to present their strategy in this context, 'Here is our trend, here is what we're doing to do to offset that trend and that will bring our net cost down to X without sacrificing Y.' You don't want to have a health care strategic discussion in May and a separate budget discussions in September. Include what it will take to achieve your strategy in the administrative cost of your health plan and get the green light at the time you present your strategy. A separate budget discussion months after you have agreed on strategy is a non-starter.

  • Look for ways to drive participation in your programs. Your investment can go to waste if your employees aren't taking advantage of the programs you put in place. We look at technology solutions below, but don't overlook the importance of thoughtful internal communications campaigns, making Open Enrollment an event instead of a chore, and reinforcing your benefits narrative throughout the year.

 

3. Don't hesitate to embrace innovation

While innovation in medical devices, treatments and pharmaceuticals have made exponential gains, the technology that helps people navigate and pay for those advances has been stuck in the era of fax machines. Fortunately, that's changing quickly. Investors have increasingly been pouring money into healthtech –more than $10 billion over the last few years — giving you new products to take advantage of. We're most excited about:

Of course, change doesn't happen over night. But with overall costs continuing to rise and the American workforce looking to employers to lead the transformation of health care, it's time for companies of all sizes to start thinking about benefits as a strategic opportunity, not just just a budget line item.

 

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