COVID-19 upended the status quo for every employer in every industry. But how are we embracing this opportunity for innovation?
Health care benefits present a sizeable opportunity for improvement. New data estimates that in 2019 our national health care expenditures reached a staggering $3.8 trillion—nearly 18% of the U.S. economy. Employers pay a huge chunk of this cost.
According to a 2020 Kaiser Family Foundation survey, 89% of workers are employed by a firm that offers at least some health benefits. On average, covered workers contribute only 17% of the premium for single coverage and 27% of the premium for family coverage. So, who’s picking up the rest of the tab?
The data tell us employers are paying up to 83% of health premiums. Yet despite this substantial investment, employers and their employees increasingly are dissatisfied with what they get in return, as evidenced by a 2020 benefits study by The Hartford that showed a 7% drop in workers’ value perception in just three months.
Clearly, COVID-19 has shined a light on the cracks in our benefits system. Costs continue to rise, while the service and value employers get from benefits providers continue to fall. If the pandemic hasn’t upended employers’ approach to health benefits, it should.
Given that employers pay up to 83% of health benefits costs, one would logically assume that they hold the balance of power during benefits negotiations. In reality, we know the opposite to be true. For years, employers have accepted less and less value from their benefits providers. Employers typically are forced to concede access or service to hold the line on costs, or else endure steadily rising rates.
At the same time, the concept of value-based care has taken hold throughout health care.
The simplest way to describe value-based care is that it uses financial alignment between payers and health care providers to drive up care quality and drive down costs. It holds doctors and other providers accountable, and it has shown some promising results. Now it’s time to ask: Who is holding health plans and pharmacy benefit managers (PBMs) accountable? It’s time for employers to request their rightful place in the value-based care conversation.
Most health care stakeholders recognize that, while providers work tirelessly to deliver care, the system needs to evolve to deliver better value and address longstanding inequities, disparities, and misalignments. The problem is that stakeholders have too many vested interests in the status quo to move away from it too fast or too far on their own. Real health care transformation will only happen when those who purchase health care benefits—employers—start demanding more value from their investments.
Employers today have a once-in-a-lifetime chance to hold benefits providers accountable. It’s time to challenge the idea that the only way to reduce costs is to give up services or access. To extract more value from benefits offerings, employers must ask benefits providers tougher questions. Here are a few key inquiries with which to start:
How will you help improve the health of my specific employee population?
Clinical programs should not be one-size-fits-all. They should be customized to each individual employer—and even to sub-populations within the organization. Employers should mandate a clinical strategy tailored based on their unique populations and utilization levels. Ensure, too, that clinical programs take a proactive approach to improving employees’ health and wellness.
How will you create a good experience for my employees and our benefits team?
Top priority should be given to improving employees’ access to health care services, with equal consideration given to strategies that lower employee and PMPM costs. But there is no reason to sacrifice experience. Benefits providers should have good bedside manners when engaging with your employees and your benefits team. Cost, access and service are not mutually exclusive. Employers must insist on tailored solutions that deliver greater access, lower costs and a fantastic service experience.
What incentives do you have for keeping down my overall costs?
The phrase “shared savings” is used a lot in value-based health care. In very basic terms, “shared savings” refers to when health care payers and providers align their financial incentives so that they both benefit from higher-quality, lower-cost care. Employers should seek similar kinds of solutions from their benefits providers. Value in health care benefits requires financial alignment, too. Benefits providers should be able to deliver guaranteed cost savings—and have skin in the game if they don’t.
How satisfied are your employees?
One would expect that providers satisfied with their work experience achieve better results than those who are dissatisfied. In addition to asking about customer satisfaction rates, take a peek inside the benefits provider’s company. Benefits providers should hold the same philosophy, internally and externally. Satisfied employees equate to satisfied customers. So, don’t hesitate to ask: How satisfied are the employees who work for your benefits provider?
Part of the entrepreneurial mindset is recognizing that every challenge brings opportunity. As devastating as COVID-19 is, it presents an unprecedented chance for employers to demand more value from their health care benefits providers, and to drive a transformation that better meets their employees’ needs.
Why go back to the old, misaligned status quo, especially when there’s a golden opportunity to generate a groundswell that advances the entire industry? Employers must leverage their purchasing power and stop brokering trade-offs between cost and service. Employers should demand better and instead evaluate their health benefits in the context of value.
Karthik Ganesh is CEO of EmpiRx Health.