Zak Holdsworthco-founder & CEO at Hint Health.
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On the road to open enrollment, benefits managers are faced with even higher healthcare costs estimated for 2023. And they are tasked with delivering more robust benefits to retain employees, while also controlling costs amid high inflation and an impending recession. Add to that the fact that a legal responsibility has now been created under the 2021 Consolidated Loans Act plan disclosure and employers’ fiduciary duties to provide plans greater value, so pursuing more innovative benefit strategies that address the root cause of rising health care costs is critical.
Nearly 155 million Americans are covered by employer-sponsored health insurance, and last year, when workers and their families resumed care delayed by the pandemic, these plans experienced the highest annual increase in costs per employee since 2010 at 6.3%.
As the co-founder and CEO of a company focused on driving direct primary care, my team works closely with health benefits leaders who are using innovative solutions to address rising healthcare costs. Historically, many employers have looked to high-deductible plans to control costs, but research by the Kaiser Family Foundation has been on a downward trend over the past two years as employers look to offer other options for employees. Alternative approaches include defined contribution plans, which allow employees to purchase their own health insurance to meet their specific health needs, but these have not yet been widely adopted.
Proven cost-effective solutions
In recent years, the need has increased to rebuild or abandon the current fee-for-service model. For example patients want more access to virtual carebut the fee-for-service model often makes virtual care unattractive to caregivers, who may be receive a fraction of the fee for virtual visits than for personal visits.
We see from the employers we work with that there is a growing movement to more directly manage their health benefits in ways that provide greater value, align with their organization’s values and goals, and reduce overall health care spending.
It may seem daunting to try to take an alternative approach to managing health care benefits, but it’s an uphill battle to settle for rising insurance costs that don’t deliver better quality for your employees. Here are three strategies benefits leaders can use to circumvent ever-rising insurance costs while still delivering competitive health benefits to employees.
1. Partner with forward-thinking benefits advisors
Many employers are unaware that their benefits brokers and counselors often receive commissions from health plans and pharmacy benefits administrators for selling their products. These advisors may be caught between doing what is in the best interests of their employer clients and recommending plans that earn them higher commissions.
That’s why I recommend seeking benefit-based benefits consultants who are willing to examine every aspect of an employer’s benefits plan to avoid inflated administrative costs and low-value programs. Some benefit advisors charge a flat fee, which can help align their incentives with your goal of providing higher value and better quality offers.
2. Put primary care at the center of your benefit offer
Access to high-quality primary care can improve health outcomes and reduce overall health care costs. Yet the US spends only 6% to 8% of total health care dollars on primary care.
However, the future looks bright. In 2021, companies focused on primary care Raised $16 Billion from investors. Public markets are taking notice, as shown by CVS Health launching a virtual primary care solution and of course that of Amazon acquisition of primary care startup One Medical.
These different players all aim to tackle the pitfalls of primary care and be the front door of a patient’s care journey. Benefits leaders, however, need to find vendors that build meaningful relationships and trust between the provider and the member, rather than just replacing that relationship with technology. There are countless reasons why a decreasing number of Americans have a GP, but one of the main causes is the deterioration of the relationship between patient and healthcare provider. And in the fee-for-service model, doctors are often not encouraged to spend time building trusting relationships with their patients.
3. Consider alternative payment models
Concerns about costs are a primary reason why many people do not have access to health care. More than one in four people said they are avoiding medical treatment because they are unsure of their health coverage.
According to an analysis published in the Journal of the American Medical Association, the US health care system wastes as much as $935 billion a year due to factors such as administrative complexity and lack of coordinated care. The opportunity to make an impact is huge, and therefore alternative payment models can be a good option for employers.
Innovative approaches, such as membership-based primary care models, aim to tackle the costly waste in health care by realigning caregiver incentives with quality outcomes and delivering value-based care. The two types of membership models are: concierge medicine and direct primary care. The first was developed as an alternative to volume-based care models to give physicians more time with patients. However, concierge medicine can be prohibitively expensive for some populations, as a patient generally pays a membership fee to the practice, as well as insurance contributions. With direct primary care, doctors are paid directly by the patient or their employer, eliminating the need to use primary care insurance. Both models extend the time a patient has with their healthcare provider to focus more on disease prevention. Each model often also includes a virtual care element that enables more intensive patient care.
As employers strike a balance between fiduciary pressure to cut costs and a tight talent market, now is the time to rethink benefits strategies and invest in more innovative solutions.
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