The Healthcare Affordability Gap: Employer Confidence Meets Employee Skepticism
The burden of paying for healthcare benefits has grown substantially for many employers. As the average expense for employee healthcare is projected by the Society for Human Resources Management to increase by 6.5 percent in 2023, surpassing $13,800 per employee, businesses of all sizes struggle to balance their budgets while ensuring their workforce remains healthy and productive.
And it isn't just employers who are facing problems. Though over 90 percent of people in the United States have some type of health insurance, 41 percent have medical debts, according to data from the Kaiser Foundation. This can result in situations where employees refrain from accessing healthcare benefits
Employer Confidence
According to a survey by Arizent, 70 percent of employers rate their benefit options as more maximal than minimal. Over 80 percent have digital tools for healthcare navigation, fitness tracking, and chronic condition management, which are considered innovative by 53 percent of employers. Additionally, nearly 80 percent were motivated to include healthcare navigation to provide a better employee experience, improve health outcomes and reduce costs.
According to 68 percent of employers, their budget limits the benefits they can offer. When making decisions regarding benefit offerings, employers rely on benefit consultants (65 percent), existing benefit usage data (62 percent), employee surveys, and medical plan claims data (58 percent), with only 16 percent looking at social health determinants.
The most common benefits include traditional health, vision, and dental plans, as well as paid sick leave. However, employees want further benefits like gym access (50 percent), nutrition support (42 percent), and wellness activities (41 percent). Support for mental health (34 percent), chronic conditions (29 percent), and family-building (28 percent) also ranked high on employee want lists.
Employee Skepticism
Despite employer confidence in their benefits offerings, employees are not as convinced. The survey reports that 66 percent of employees say the cost of receiving care through their current health plan is too expensive, with only 32 percent claiming it is appropriate. Moreover, nearly one-third of employees find it challenging to afford specialist care, urgent or emergency care, dental care, and imaging. While 80 percent of employers consider their health insurance affordable, employees may disagree.
Even while telehealth and primary care are affordable for more than 80 percent of participants, a healthcare affordability gap still exists. For example, according to McKinsey, a four-person family with an annual income of $60,000 could spend as much as 75 percent of their discretionary income on healthcare.
The Healthcare Affordability Gap: Bridging the Divide
The healthcare affordability gap poses challenges for employers and employees, with employers facing rising costs and employees struggling to afford care. To address this issue, a collaborative effort is needed, focusing on the following key areas:
- Innovative Strategies: Employers should explore value-based care and alternative funding models, such as self-insurance or level-funded plans, to improve patient outcomes and reduce overall costs.
- Transparent Communication: Clear explanations of benefit offerings and cost-sharing structures can help build trust and ensure employees understand employer efforts to improve affordability and accessibility.
- Employee Education and Support: Prioritize resources and tools that help employees navigate the healthcare system, make informed decisions, and access wellness programs, such as gym access, nutrition support, and mental health services.
- Leveraging Data and Technology: Employers can use data analysis and digital health tools to identify trends, monitor effectiveness, and refine benefit offerings according to workforce needs.
The Need for a Holistic Approach: Insulin Price Caps May Not Be Enough
Addressing the high healthcare costs in the United States requires a multifaceted approach that targets the foundational issues within the system. One example that highlights the potential pitfalls of a narrow solution is the recent effort to cap insulin prices.
Major insulin manufacturers (Eli Lilly, Novo Nordisk, and Sanofi) have capped insulin prices at $35, $72.34, and $35 per vial, respectively. While this move is a significant step towards mitigating rising drug costs, it could potentially backfire and have unintended consequences.
When insulin price caps bypass Pharmacy Benefit Managers (PBMs), PBMs may end up raising prices elsewhere, offsetting the benefits of the caps. As a result, employees might end up paying more for medications through their employer's plan than if they purchased them directly from the drug manufacturer.
This example underscores the importance of adopting a holistic approach to tackle the high costs of healthcare rather than implementing isolated solutions that could be counterproductive.
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