Employers look to affordable, quality benefits to stave off the 'Great Resignation'
Between the exodus of employees and rising health care costs, employers need to think more strategically about employee retention.
Employee happiness right now is critical as employers face what the media is calling, “The Great Resignation.” A recent survey from the U.S. Bureau of Labor Statistics shows resignations are at an all-time high. By June 2021, a record 3.9 million employees quit. Between the exodus of employees and the rise of health care costs, data shows employers need to think strategically about employee retention, starting with their health care benefits.
Related: How employee benefits aid in retention and recruitment
It’s important to consider price and quality in health care options, which can create value for employers. We are seeing employers adopting trends in buying health care differently, including:
- Interest in value-driven health plans
- Expectations of a consumer-shopping model for health care
- Giving members access to data on quality and cost
- Direct-to-employer purchasing from the health system
- Looking for added value and transparency
An added benefit? More options help to reduce health care costs and improve quality.
Helping employers sustainably cut health care costs
With the burden of increasing health care costs, we’ve seen growing interest in alternative health savings like Value-Driven Health Plan services (VDHPs). Value-Driven Health Plan services substitute or complement a provider network with pricing for some claim types based on a reference such as Medicare and, more importantly, the average discount using Medicare Plus is 74% versus traditional plan discounts of 45% – 60%. Value-based pricing operates from bottom-up pricing versus top-down. Medicare sets a price and the plan pays Medicare Plus a percentage. Standard VBP is 140% of Medicare.
In addition, VDHPs incorporate tools that engage the employee and health care provider to optimally use their employer’s plan’s benefits.
Coming out of a pandemic, employers must control their health care spend. Employers want to know that health care will remain affordable going forward. Offering VDHP services allow employers to know what they’re going to pay because benchmarks and supportive data are provided. On average, when an employer adopts a VDHP, they are experiencing a reduction on their overall medical spend, by 20% to 30%, including lower deductibles, copays and contributions when compared to traditional insurance carriers. An employer that has 100 employees participating in their health plan will likely have claims expenses of at least one million dollars, a VDHP can reduce those costs by $200,000 to $300,000.
Technology-driven transparency
Lack of pricing transparency makes controlling health care costs a big challenge for employers. Giving employers the ability to budget and account for actual plan costs over time is something the market needs, as medical costs continue to increase. In the last 50 years, the amount spent on health care has increased to 17.7% of the GDP, from 6.9% in 1970. Health spending is estimated to represent a larger portion of the economy in 2020 than in prior years.
In addition, consumers (and employers) lack visibility into health care pricing and quality as 90% of all medical decisions are made without knowing the cost, according to InstaMed Trends in Healthcare Payments 2020 Annual Report.
Transparency with health care pricing is expected among employers looking to better understand the cost of benefits. VDHP designs are the next generation of services that transform traditional reference-based pricing, using key benchmarks like Medicare and cost reimbursements along with other facts to reduce the cost of health care services. Employers should do their research to find an option that is designed to be a fully integrated experience.
In addition to transparency regarding health care costs, access to an individual’s data allows members and patients to make appropriate buying decisions. In the traditional and current model, 40% off a billed amount that is ten times the provider’s cost makes no sense. Our health care system in the U.S. today does not work for all the participants, particularly the patients and providers.
The push toward more member access is evident with mobile apps and information available on websites that provide benchmarks on providers based not just on cost, but also on quality.
These tools allow employees to see what they might pay for health care services and give them the information necessary to make an informed decision on where to go for care.
Shifting consumer purchasing habits
As more health care experiences shift to a consumer-shopping model, with increases in online searches for medical information and providers, industry data shows new tools may help lower medical costs, improve acceptance and predictability and increase plan member satisfaction. The COVID-19 pandemic accelerated a change in the industry. Deloitte’s 2020 Survey of US Health Care Consumers noted, “providers that prioritize authentic information transparency stand to benefit from the shift to consumer-focused health care, particularly as online shopping for health care transitions from being the exception to the rule.”
Employers looking to either save money or expand health care options may look to contract directly with a health care provider including a large system, hospital or clinic. According to the 2019 Employer Health Benefit Survey conducted by Peterson-Kaiser Family Foundation, among large self-funded employers (200 or more employees), 8% had direct contracting arrangements in 2019. This model has potential to grow, and it is being tested by some employees at companies like General Motors and Walmart, who have a large geographic concentration of employees. Their contracts with large health systems typically provide a full range of health care services and may require travel by some patients, according to Catalyst for Payment Reform, an advocacy group.
Setting realistic goals
In the U.S., with the advent of the No Surprises Act and the Transparency in Coverage rule, health care payors are tasked with managing changing regulations. This in turn, has an effect on employer groups looking to make decisions using the latest information regarding the transparency changes. While it’s too late for these regulations to have an impact on the current open enrollment season, employers looking to determine the value of medical services by bottom-up pricing and reimbursement benchmarks should continue to follow the changing tide.
The bottom line
In the U.S., employer-sponsored health benefits are the norm, where 86% of workers report participating in medical care plans with an employee contribution requirement, according to the U.S. Bureau of Labor Statistics report from March 2020.
When an organization focuses on growth and profitability, they use proven metrics and quantifiable data. Why should an organization’s health care benefits be any different? Amid the Great Resignation, employer benefits are under scrutiny and using every tool in the benefits toolkit, such as VDHPs, is the key to helping employers protect their bottom line while fostering employee retention in these turbulent times.
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