Employers to Tackle Employee Healthcare Affordability Amid Rising Costs

Nearly all employers expect to offer virtual care to meet demand for medical and behavioral health services.

The vast majority of U.S. employers (94%) say managing healthcare benefit costs will be their top priority over the next two years, followed by enhancing mental health benefits (87%), according to a recent release by WTW (Willis Towers Watson).

With health cost increases showing signs of accelerating, employers are boosting efforts to make benefits more affordable and are elevating employee awareness of what benefits are offered and how best to access them.

The pandemic and the shift to remote work have contributed to a worsening of mental health among employees and their families. In response, two-thirds of employers surveyed (66%) said ensuring that their health and wellbeing programs support remote workers will be a key priority of their healthcare strategy over the next two years; 62% plan to enhance programs and wellbeing activities to focus on health issues of family members, based on data released in a new survey conducted by WTW.

When asked what their greatest challenges will be to effectively deliver on their healthcare strategy over the next two years, 73% cited increasing healthcare prices due to rising inflation and provider consolidation. More than half (54%) identified lack of employee awareness about where to find programs to support their needs as a key challenge.

“Many employers find themselves in the middle of a perfect storm,” said Lindsay Hunter, senior director of Health and Benefits at WTW, in the release. “Inflation and rising healthcare costs, ongoing emotional and physical wellbeing needs, and attraction and retention challenges caused by a tight labor market are driving employers to carefully evaluate their benefit programs and strategies. In particular, they are looking for ways to make healthcare more affordable for themselves and their employees.”

Indeed, nearly two-thirds of employers (64%) will take steps to address employee healthcare affordability over the next two years. These approaches include improving quality and outcomes to lower overall cost (55%) as well as adding or enhancing low- or no-cost coverage for certain benefits (41%). Additionally, over the next two years nearly one-third (32%) of employers expect to make changes to their employees’ out-of-pocket costs, while 21% expect to make changes to their health plan payroll contributions, the release said.

The future of virtual care

As the pandemic subsides, virtual care is positioned to become an essential and long-lasting feature of employers’ healthcare strategies, the release said. By the end of 2023, most employers (95%) are expected to offer virtual care for medical and behavioral health issues, and 62% expect to offer lower cost sharing for virtual care. Over half (55%) think the expansion of virtual care will help decrease costs in the long run, and 50% think it will improve outcomes.

“The pandemic upended traditional healthcare and set us on a new path that includes virtual options, which proved to be highly effective during the pandemic,” said Julie Stone, managing director of Health and Benefit at WTW., in the release. “We expect more employers will embrace healthcare delivery innovations, such as virtual care for physical therapy and lactation counseling, to improve access and better manage their health costs.”

Additional survey findings stated in the release include:

  • Employer confidence in sponsoring healthcare benefits over the next 10 years is at its highest point in over 10 years (84% in 2022 versus 38% in 2011).
  • Employer interest in genomics benefits is increasing as testing options and treatments advance. For example, one in 10 employers (9%) currently offer genetic testing as a screening for early-stage cancer with another 5% planning to do so by 2023.