How Brokers Can Help Reduce Employer-Sponsored Insurance Costs

By PokitDok Team,

health insurance

The costs of employer-sponsored insurance is set to rise again, a survey by Willis Towers Watson reveals. Employers expect healthcare costs to increase by 5.5 percent in 2018, which is significantly higher than the expected 4.6-percent increase in 2017.

Similar findings were reported by the Large Employers' 2018 Health Care Strategy and Plan Design Survey, which surveyed mostly from Fortune 500 companies. According to the survey, "the total cost of health care is estimated to be $13,482 per employee this year, and projected to rise to an average of $14,156 in 2018."

There are several factors that affect employers' healthcare costs and, consequently, a number of different strategies that employers can use to manage the costs of their health benefit plans.

One cost-effective way to reduce employer healthcare spending is to increase the use of price transparency tools. In this article, we discuss the role of these tools, the move to offer transparency, and whether price transparency alone will have a big impact on curbing the costs of employer-sponsored insurance.

We also look at two more ways brokers can help employers to trim costs: advocacy and employee engagement services.

health care costs

Improving Price Transparency in Healthcare Services

The lack of price transparency in the US healthcare system has long been a problem. The prices of medical services and treatment are notoriously difficult to get, and patients often do not know how much their financial responsibility is.

Health plans with high deductibles or copayments have put an onus on patients to be more price-conscious, however. In an interview with Smart Business, insurance and benefits analyst Ron Smuch points out that "a person with a high deductible is more likely to be more conscious and concerned about price, which results in their curiosity to inquire about how much things cost." This has, in turn, increased the demand for price transparency tools.

Brokers can provide transparency tools such as databases, price calculators and online resources that offer employees more clarity regarding their medical and pharmacy out-of-pocket costs. Such tools can detail what an employee's health insurance will cover and what they will need to pay for. These tools can make clear to the employee the cost trade-off of, for example, opting for an in-network provider versus an out-of-network one.

Dan Hodges at Woodruff-Sawyer and Company notes that, aside from the tools big insurers such as Blue Shield and Cigna provide, there are also third-party price transparency tools available. Healthcare Bluebook provides a platform to better manage healthcare costs through price information.

It's not enough for employees to be able to check prices, however. They should also be able to compare prices for their medical treatments, services, and prescriptions. Price comparison will empower employees to make decisions on their healthcare based on value, instead of purely price.

As Veronica Hawkins at Medical Mutual tells Smart Business, other than price, consumers are also looking at reviews and ratings when making healthcare decisions. She highlights that Medical Mutual's cost comparison tool provides that kind of information as well as key information on doctors.

This information can ultimately lower costs for both employee and employer, and it would make the healthcare market more competitive as consumers become savvier and select providers in a more value-conscious way.

Moving From Transparency Tools to Transparency Services

To go one step further, brokers can also offer transparency services. In this case, instead of putting the onus of price comparison and shopping for healthcare on the employee, employers can get their brokers to do the work for them.

What are transparency services? DirectPath [registration required] defines the term as "access to a pool of specialists that -- on behalf of an employee -- will do a cost and quality comparison of a health care procedure, and provide a report presenting multiple options."

Citing various studies, the report notes that employees are not taking full advantage of transparency tools to lower their healthcare spending. This is where transparency services can fill the gap.

And there is a demand for it. Another study by DirectPath [registration required] shows that 74 percent of brokers offer transparency services to help employers better manage their healthcare costs. Seventy-seven percent of brokers who were surveyed said they saw value in providing this service.

While engaging transparency services does incur upfront costs for employers, Bridget Lipezker at Benefits Pro thinks it is worth it. To illustrate how transparency services can be effective in controlling costs, she shares the following case study:

"A manufacturing company with 5,000 employees saw requests for nearly 300 transparency reports in just six months. In that time, their employees saved $88,200 and the employer $326,781."

doctor giving medicine to senior woman for arthritis pain

Other Ways To Reduce Employer-Sponsored Insurance Costs

In addition to providing transparency tools and services, here are two other ways brokers can help reduce employers' healthcare spending.

1. Offering Health Advocacy Services

Health advocate services provide employees with guidance and advice on how to navigate the complex healthcare system. With regards to cost, advocates can handle everything from reviewing bills and claims, managing billing errors, and handling any disputes for unnecessary or overpriced charges.

An article in the Los Angeles Times by Lisa Zamosky highlights how advocacy services can be valuable, both in terms of financial and emotional costs.

Increasingly, employers are incorporating advocacy services as part of their health plan benefits. Consulting firm Mercer reports that 54 percent of employers offer a health advocacy service. It notes that "in the best programs, a health advocate helps members find the right healthcare provider, compare costs, and resolve claims problems ... [and] will stay in touch throughout a care episode to provide support as it is needed."

2. Improving Employee Engagement in Wellness Programs

A long-term way to lower employer-sponsored insurance costs is to increase employee engagement in health and wellness programs. After all, healthier employees means lower healthcare costs.

In fact, employee engagement programs are in high demand, according to DirectPath which says brokers report a higher demand for such programs (83 percent) than for advocacy and transparency services (69 and 56 percent respectively).

More employers are coming around to the idea of promoting wellness as a cost-management strategy. This is especially true for large firms, according to the 2017 Employer Health Benefits Survey by Kaiser Family Foundation. The survey found that 85 percent of large firms offer at least one key wellness program (compared to 58 percent of small firms). Moreover, 32 percent of large firms that provide wellness programs offer incentives for participation.

Additionally, employers are also using wearable tech to encourage wellness. The Mercer survey found that 31 percent of employers encourage employees to track their physical activity with a wearable device, and 37 percent leverage mobile apps to motivate healthy behavior.

Wellness programs can lead to massive cost savings, as Jim Purcell at Harvard Business Review reports. He cites a Rand Corporation study that found disease management programs led to $136 in savings per member, per month and resulted in 86 percent of the hard healthcare cost savings.

Beyond cost savings, Purcell encourages a holistic view of employee wellness. Employers reap other benefits, he says, as healthier employees are more engaged and productive, less likely to take unscheduled paid time off, and more likely to be satisfied with their jobs and stay with the organization.  

Put in that way, it's certainly an incentive for brokers and employers to design wellness programs that appeal to and engage employees in maintaining their health.

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The opinions expressed in this blog are of the authors and not of PokitDok's. The posts on this blog are for information only, and are not intended to substitute for a doctor-patient or other healthcare professional-patient relationship nor do they constitute medical or healthcare advice.

  Tags: Price Transparency, Providers