Traditionally, the face of the payer industry, for better or worse, has been health insurance companies. However, companies, especially large employers, wield incredible influence in the world of health insurance.
Employers offer and manage health benefits for more than half of all Americans. According to the U.S. Census Bureau, in 2021, 54.3% of U.S. adults were covered by an employer-sponsored health insurance plan for all or part of the year.
So how do large employers affect the health insurance industry?
Developing health benefits
Health benefits are extremely important to employers because of their impact on employee costs and retention. During the Great Layoff, employees and human resources (HR) professionals ranked health care and health insurance benefits as the fourth and fifth most important employee retention tool, respectively, at a time when retention was a challenge.
Large employers, especially those that self-insure, have a lot of input into the design of health benefits. This is one of the main ways in which they can influence the health insurance industry and health care spending trends.
Health care priorities may vary from year to year due to a number of factors.
Prior to the coronavirus pandemic, cost management was an important goal for employers when designing health insurance programs, according to a Mercer study. However, in 2022, 41 percent of employers with 20,000 or more employees identified behavioral healthcare as a key focus. Other priorities include managing costs for specialty drugs (38 percent) and better serving high-cost employees (29 percent).
Four major trends in the health insurance industry could affect employers' decision-making when designing benefits. First, employers are likely to look for benefits that will lower costs for their employees, especially in a challenging economy, according to Harvard Pilgrim HealthCare. With prices rising in the U.S. and inflation outpacing wage growth, employees are not in a position to absorb additional health care costs.
Second, employers can introduce benefits related to family and caregiving. For example, some Medicare Advantage and commercial plans offer opportunities for caregiver feedback or technology to support caregiver well-being as they fulfill their caregiving responsibilities. These benefits are critical for the 60 percent of caregivers who work full-time.
Third, in the wake of the coronavirus pandemic, Americans have realized the benefits of flexible work schedules. For workers who typically have no choice but to schedule doctor's appointments during the workday but have limited free time, inflexible schedules can be a deterrent to taking care of their health.
Harvard Pilgrim HealthCare recommends that offering flexible work schedules is a health benefit that many employers can take advantage of. A flexible work schedule can mean being able to work from home on certain days, which can cut down on travel time to the doctor's office if the home is closer to the doctor's location. It can also mean switching to a four-day work week, among other options.
Finally, the need to address health care disparities is becoming more apparent as more evidence of health care disparities emerges. For example, in a recent study by Deloitte, researchers found that working women incur $15.4 billion more in health care costs per year than men.
According to Harvard Pilgrim HealthCare, employers can support historically underserved populations by offering customized benefits. This could mean offering specialized mental health benefits for members of the LGBTQ+ community or improving women's health coverage, to name a few examples.
Some benefits are mandatory and are regulated by laws such as the Affordable Care Act (ACA). Under the ACA, if an employer offers a plan in the Affordable Care Act marketplace, it must include all essential health benefits. However, these rules apply mostly to small businesses and do not apply to self-insured organizations.
Access to disease management programs
In addition to offering benefits that meet the needs of the entire workforce, employers influence the payer market by designing disease-specific programs.
With six out of ten adults in the U.S. suffering from at least one chronic disease, employers need to know and support their employees' disease management needs.
Mental and behavioral health coverage is getting more attention, especially since the Affordable Care Act required individual and fully insured small group plans to cover essential health benefits.
After the coronavirus pandemic devastated Americans' mental health and well-being, the most common tool offered by employers, according to a Business Group on Health survey, is online resources. These include webinars and apps related to mental health management.
A significant portion of employers are also considering expanding mental health clinics. Mental health care navigation programs are another important benefit that more than three in ten employers will adopt in 2023.
Most employers provide training programs for supervisors, co-workers, and employees so that employees can notice when their co-workers are experiencing mental health issues and support them appropriately. In addition, many employers offer low-cost or free telemental health care or on-site mental health care.
Employers are also expanding their chronic disease management programs. These programs typically include a structured treatment plan and supportive disease management activities with the ultimate goal of improving participants' quality of life.
Employers can work with payers or benefit managers to develop chronic disease management programs that consider co-morbidities, include wellness programs, and include employer and payer efforts to engage participants and encourage adherence. Comprehensive employer strategies should include care coordination, participant education, and screenings.
One company changed the traditional wellness program model by putting participant choice at the center of its solution. UnitedHealthcare already had a range of disease management options, but faced the same problem many employers and payers face: a large insurer struggling to attract participants and keep them afloat.
To address this challenge, UnitedHealthcare implemented a new financial reward model. It allowed participants to take different paths to wellness by expanding the definition of wellness from just "fitness" to a more holistic definition. Participants were more empowered in terms of what technology they could use to track their progress.
In addition, the program allowed for short-term goals that were updated every new day, as opposed to long-term goals, the maintenance of which can be emotionally draining. The payer also used digital health tools to make it easier to work with participants.
Experts on trends and design of employer-sponsored health plans recommend incorporating social determinants of health (SDOH) data into wellness programs. By integrating SDOH information, employers can more effectively prioritize subpopulations and design interventions tailored to employee needs.