Last week I met with several hundred employers over several days while speaking at a conference in Phoenix. These were extremely savvy CFOs and HR professionals who are looking to manage costs (isn’t everyone?), while still offering high-quality health benefits to their employees.
Back to Posts
Survey Says: Employers are more willing than ever to get creative with health plans
Employers are focused on the systemic costs and inefficiencies in the healthcare system.
What struck me about this group was their willingness to try new things and give up some choice, with the hopes of improving both cost and quality. Here were my main takeaways:
1. More employers are willing to penalize/charge more to those who are simply not healthy, or not improving toward health goals. This was much closer to a 50/50 split two or three years ago. But this year, 72 percent of the group said an outcomes-based wellness program appeals to them. This shows employers are willing to be more aggressive in shifting the risk.
2. Only 18 percent of employers said they would cease to offer health coverage to employees, if they felt they “could do so.” This is particularly interesting because the Senate is currently considering taxing healthcare premiums. This result completely contradicts the conventional wisdom that employers only offer these benefits because of the “historic mistake” of preferred tax treatment. Many employers commented that they still feel that a robust benefits offering is a competitive advantage in a tight labor market–and that even if they exited, they would increase employee compensation to the cost of the benefit.
3. Just because employers still want to offer healthcare coverage, doesn’t mean they like it. When I asked them to describe the current system in one or two words, the responses were almost entirely negative. Their descriptors included: “catastrophe,” “atrocious,” “overpriced,” “poor quality,” and—my personal favorite—“sucks.” But seriously—what does this tell us? That employers hate the product but feel they must offer it?
4. Bigger isn’t necessarily better. More than 75% of respondents said they would take a 40% smaller network to save 20% on premiums. This is indicative of the pressure on insurance carriers and TPAs to offer less of the PPO ideology,and more of the ACO/narrow high quality network concept. The old value proposition of the PPO network is clearly dying. My informal poll shows the demand for a solution.
One thing is abundantly clear: Employers are focused on the systemic costs and inefficiencies in the healthcare system. They are continually trying to manage the deteriorating health of the population, and determine the best way to distribute and finance care for their employees. While there appears to be some possibility of a legislative “fix” in the coming months, the most recent ACA draft that made its way to the Senate did not appear to address the major concerns of financial executives today. This means they must take matters into their own hands and get creative with their solutions.