Employers Looking at New Strategies to Mitigate Healthcare Costs
A recent survey just came out from Aon Hewitt citing that although cost shifting to employees for healthcare continues to remain a front-and-center strategy, employers are also looking at adopting new health tactics to mitigate cost and improve employee health in the future. This is important whether an employer utilizes a traditional health plan, is self-insured, or is turning to the use of captive insurance companies to provide medical stop loss coverage. Under each scenario, to help attain cost containment and reduced risk, a strong focus on health risk management, including wellness and disease management, health risk assessments, biometric screenings and care management, needs to be in place.
The Aon Hewitt survey found that in the next three-to-five years, more than 60% of employers plan to “gate” employees to richer designs, where employees are required to complete a “task” to access richer healthcare design options. About one in five employers gate their employees today. “Gating strategies are becoming an increasingly attractive incentive technique among employers as they look to improve the health of their employee populations,” said Jim Winkler, chief innovation officer of Health & Benefits at Aon Hewitt. “For example, employers may offer a basic high-deductible plan to their entire workforce, but make a richer PPO option available to those employees who complete a health risk questionnaire or biometric screening.”
The benefits of incorporating a wellness strategy in an organization are further underscored in a recent survey conducted by wellness provider Virgin Pulse. According to its survey, “The Business of Healthy Employees 2014: A Survey of Workplace Health Priorities,” companies using wellness as a strategy are seeing consistently and dramatically improved company cultures. Employers indicate two primary drivers for offering benefits: keeping health costs down (51.7%) and the positive impact on work culture (51.7%). The effect is noticeable, cites Virgin Pulse, with more than 8 out of 10 (87.4%) employees stating that wellness programs have positively impacted work culture. This is a gain of more than 10% from 2013, and shows that organizations investing in wellness programs are improving work environments.
Personalization, Measurement Key
A clear takeaway from the Virgin Pulse survey, however, is that for wellness programs to be effective, they need to be robust and allow for individual needs and interests. Wellness programs need to be comprehensive and tailored to individuals, meeting them where they are and helping them keep their healthy goals and ambitions in check with robust resources. “Regardless of anyone’s age, gender, health status or any other factor, these programs have to be appealing and attainable for everyone,” stated Chris Boyce, CEO of Virgin Pulse.
Also important in having an effective wellness program is measuring employee engagement in such programs. According to the Virgin Pulse survey, 23% of organizations report having successfully made a business case with measuring the outcome of health-related savings. Additionally, 38.7% of organizations have tried to track and demonstrated some success when examining the ROI on health cost reduction. However, almost half of the organizations don’t track enhanced engagement (47.8%), and more than half of the organizations don’t track improved productivity (53.1 %). “The links between a high level of engagement and business benefits are clear,” Boyce said. “Recent research shows a highly engaged workforce drives profitability, productivity and customer ratings, while reducing shrinkage, turnover and absenteeism.”
One last interesting takeaway from the Virgin Pulse survey is that employers are leaving money on the table by not taking advantage of the financial incentives under the Affordable Care Act (ACA). Of the organizations surveyed, only a quarter (26.4%) were planning to take advantage of the increase in wellness incentives provided by the ACA. Nearly half of the organizations surveyed (43.1%) have no plans to act on wellness incentives and 13.7% weren’t even aware that there were such incentives.
Increasingly more employers are realizing that traditional approaches to mitigate health care costs need to be advanced and the adoption of health risk management and wellness programs is part of what is necessary to take control of costs and have employees more accountable for their own health. At the same time, commitment to these types of programs and measuring their results using number of metrics is critical in determining success and increasing engagement.
Caitlin Morgan specializes in providing captive solutions, including medical stop loss program, and can help you provide alternatives for managing healthcare risks to your insureds. Give us a call at: 877.226.1027.
Sources: Aon Hewitt, Virgin Pulse