Money and Medicine The big painpoint for employers is with their pharmaceutical contracts,especially given the explosive growth in new specialty drugs.(Photo: Shutterstock)

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The more things change, the more they really do stay the same,to which any organization trying to effectively manage employeebenefits in an unceasingly volatile environment will attest.

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On one side, we continue to see health benefit costs on anunrelenting rise. More claims are trending from high to jumbo.Then, too are the near-miraculous, life-saving cures through genetherapy and specialty drugs with price tags that are out of reachfor most who need them—and a worrisome burden for employers.

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Related: 10 drugs topping employers' pharmaspend

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Then, there's the other. Everyone wants solutions, and findingthem has become more urgent, and not only due to the ongoingcompetition for fewer people in today's full employment economy.Financial stress has become a way of life for a large group ofworkers; only recently has wage growth reflected the strong economy. Employers thatfind ways to provide relief will be better positioned for the longterm.

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Welcome to the world of employee benefits, 2020 style, wheresuch forces are driving the following trends:

1. Employers explore their options on health plan.

More employers will start to shoulder more of the burden of plancost increases and also explore plan options that will meet bothaffordability and health needs.

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Health care costs are one reason for the financial stress thatpressures a big percentage of today's workers, and it'sunderstandable: Since 2009, according to the Kaiser FamilyFoundation, average family premiums have advanced by 54 percent and workers have paid 71 percent ofthe total. Over that period, though, wages have only grown by 26percent, only slightly better than inflation's 20 percent.

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Meanwhile, the average single deductible for workers who haveone has also risen sharply—doubling to $1,655—in the last decade.Look for more employers to respond to this untenable squeeze bytaking on a bigger share of premium increases. While it may hittheir bottom lines, it will help relieve some of that financialpressure on their workers. And it's also an increasingly importantmove for recruiting purposes.

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Employers and their people are also united in the quest for planoptions that offer better health and financial benefits. One suchlikely possibility are Individual Coverage Health ReimbursementArrangements (ICHRAs). Expect small and mid-sized employers toadopt such consumer-directed, account-based health plans, thanks toexpanded government rules on their use.

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On another front, employers that are increasingly comfortablewith self-funding route to health benefits are finding newopportunities to pare back costs. Larger concerns are contracting directly with health care providersto negotiate savings; mid-sized firms are similarly using vendorsto help them put reference based pricing strategies in place (inmarkets that can support them).

2. High cost drugs create cures but costly claim headaches,too.

The big pain point for employers is with their pharmaceuticalcontracts, especially given the explosive growth in new specialtydrugs. While they come with amazing curative capabilities, or atleast will prolong lives, they also come with breathtakingly highprice tags. By 2016, specialty drugs accounted for nearly half ofthe drugs we pay for, and some experts believe will comprisetwo-thirds of all drug launches by 2021. Smallwonder employers are increasingly crying, "Mercy," and asking theiradvisors if they really have to pay these claims. Compassion can behard to come by when an unexpected claim stands to break abudget.

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In this environment, prescription carve-out programs have becomeessential, though be warned that carriers are rewriting theircontracts to block them and avoid losing the profits. It's alsomaking outside pharma and benefits advisors hot commodities asintermediaries between pharmacy benefit management services andmanfacturers' assistance programs to successfully reduce high costclaims. A third alternative of amending plans to exclude such drugsis getting talked about more, but remains the riskiest option forcompliance issues if nothing else.

3. Middle-market employers reap enhanced benefits insights withpredictive analytics.

The ability harness the power of data with advanced, predictiveanalytics has up until recently been something only big businesscould afford to tackle. But in the last few years, a class ofvendors has emerged that's geared to the needs of smaller,self-insured employers. They have overcome security and HIPAAconfidentiality concerns to aggregate and analyze a customizeablerange of benefits data.

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For example, predictive analytics enable benefits management toput a finger on current benefits costs, what's driving them and,more importantly, whether the trends will continue given changingdemographics of the workforce. That helps on cost management, butalso on identifying employee needs and the appropriate product mixmoving forward. It's opening an exciting opportunity not just tomake sure benefit dollars are being put to their best use, but thatthe side goal is also accomplished of creating healthier andhappier employees—with less turnover.

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As we usher in the first year of a new decade, a lot of what weare seeing on the benefits front will look familiar. It's how werespond that will make things interesting.

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Mike Barone is the president of employeebenefits at HUB International.

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