In normal times, employers (and their actuaries) have a solid estimate for their annual health plan cost by the middle of the year. The pandemic has played havoc with health care utilization patterns and made cost projections challenging. Still, results from Mercer’s National Survey of Employer-Sponsored Health Plans 2020 (conducted July-September, with 1,812 employers participating) indicate that health benefit costs for 2020 will be lower than anticipated for many employers.
Overall, health benefit cost is expected to rise by 3.4% on average in 2020 among all employers with 50 or more employees, to reach $13,674 per employee. But while this overall cost increase is in line with past years, large employers (those with 500 or more employees) reported that cost would rise by just 1.9% -- the lowest increase in since 1997. Because large employers typically self-fund their plans, lower health care utilization directly affects their spending in the current year. This is not the case for employers with fully insured plans (most small employers); however, they may receive premium rebates from their carriers next year.
Going into 2021, the slower cost growth in 2020 has allowed most employers to avoid cost management tactics that shift cost to employees or are otherwise disruptive. In fact, survey results show that many have focused instead on supporting employees with additional resources to help keep them engaged and productive during these tough times.
Employers address concerns about low utilization of behavioral health care
A Mercer claims analysis found that fewer employees are receiving behavioral health treatment this year than last year, despite the likely greater need as the pandemic intensifies issues with work-life balance, isolation, sleep disorders, alcohol consumption and financial stress, and has worsened the opioid crisis. Employers have recognized the problem: In the survey, out of 11 possible priorities for employee well-being, behavioral health was ranked first by a wide margin, with 75% of large employers calling it a priority. More than one-fourth (29%) have already provided managers with formal training to support their employees’ emotional and behavioral health needs, and another 24% are planning to. About one-fifth (19%) say they plan to add programs or services to expand access to behavioral health services next year.
Many working parents face additional sources of stress due to disrupted school schedules and lack of childcare. While 40% of all large employers are permitting flexible schedules to allow parents to care for children during daytime working hours, relatively few offer childcare benefits. Even among very large employers (5,000 or more employees), just 17% provide a financial subsidy for in-home childcare, and just 14% provide a back-up childcare benefit.
Many employees are substituting virtual care/telemedicine for in-person visits – and employers see that continuing
Utilization of virtual care and telemedicine services were low prior to the pandemic; in 2019, large employers reported that just 9% of eligible employees or family members used their telemedicine service at least once. In 2020, however, the utilization rate jumped to 14% within the first six months – by the end of the year it will likely climb still higher. To encourage employees to use telemedicine services, many employers waived copays: where 82% charged a copay before the pandemic, just 48% did so this summer.
Employers were largely pleased with the performance of their telemedicine provider in terms of customer service and wait time during the pandemic: 74% were very satisfied or satisfied and only 2% were dissatisfied, while 24% didn’t have enough feedback to say. Given the wider adoption of telemedicine during the pandemic, it’s not surprising that 80% say it will play a larger role in their programs going forward.
A traditional telemedicine visit is not the same as a virtual visit with one’s personal primary care physician or specialist – while both have a role in healthcare delivery, they differ in terms of patient experience, cost, and likely the overall value of the visit. As employers begin to plan for a larger role for virtual care in their programs, they’ll need to think about how to incentivize employees to use the right modality for the service they need – AI, telemedicine, a virtual visit with their own provider, or an in-person visit. Getting the pricing right for the different levels of care – or even moving to a bundled payment model -- will determine whether virtual care ultimately helps control healthcare cost as well as add convenience.
With workers dispersed, employers seek new ways to engage employees
More than half (56%) of large employers say they are “extremely” or “very focused” on the employee experience, and, in 2020, 40% report that their organization’s mission statement explicitly supports creating a healthy workplace culture – up from 23% three years ago in 2017. But employers now face the challenge of engaging both employees at their worksites and those working remotely.
Virtual programs allow employers to support employees wherever they are, whenever help is needed. More than a third of all large employers offer a health navigator service, either a telephonic service (29%) or an AI-powered digital service (6%), to help employees find the right provider and offer assistance during episodes of care, and another 16% are considering it. Nearly one-fourth (23%) of those with 5,000 or more employees will add new targeted health solutions – typically with a digital component -- in 2021 to help employees better manage health conditions on their own or help them improve their health habits.
Almost a quarter of all large employers (23%) say they will add or expand their voluntary benefit offerings in 2021. These include supplemental health insurance, such as cancer or critical illness insurance and hospital indemnity plans, but also coverage to protect employees from a variety of unexpected expenses, such as pet insurance. By offering a wide range of voluntary plans, employers give workers the ability to select benefits that meet their own particular needs right now. That helps strengthen the connection between employee and employer – and connection is something we could all use more of right now.
Check out our infographic for data highlights.
About the survey: Mercer’s National Survey of Employer-Sponsored Health Plans included 1,812 public and private employers in 2020. Based on responses from a subset of employers in a national probability sample in combination with a non-probability sample, survey results have been weighted (using employer size and geographic stratification) to represent the approximately 246,000 employer health plan sponsors across the US with 50 or more employees. These organizations employ about 125 million full- and part-time employees.
The full report on the Mercer survey, including a separate appendix of tables of responses broken out by employer size, region and industry, will be published in March 2021. To be notified when the report is available, sign up at www.mercer.com/health-benefit-trends.