Companies Rethink Delivery of Employee Health Benefits
Workplace Wellness When inflation is low, companies can’t raise prices, but they must still manage rising health benefit costs.
According to the Bureau of Labor Statistics, inflation in the United States was 0.2 percent for the 12 months ended July 31, 2015 – pretty close to a historical low. According to a recent survey, however, these costs should grow by 4 percent in 2015.
This challenge is compounded for companies with multiple regional or national locations, which must implement health care strategies that work for employees no matter where they live.
If one health insurance company had the best provider networks and pricing in every location, the problem would be solved. But there is analysis indicating that no single carrier has the best network in more than half of the regions across the U.S.
"As benefit costs increase, employers seeking ways to maintain a competitive advantage in the war for talent without breaking the bank could turn to private exchanges in greater numbers."
This puts the onus on employers to select and manage carriers and provider networks in many geographically dispersed markets. A costly and time-consuming endeavor, it’s also fraught with compliance and administrative complexities.
Keeping health key
Health benefits are integral to the employee value proposition, so companies must navigate changes to preserve this prized benefit. Some of the nation’s most recognized names, including Starwood Hotels and Resorts and Time Inc., have adopted private exchanges to deliver health benefits.
Companies interested in these innovators’ moves should understand four things about the value of an exchange:
1. Private exchanges can provide access to high-performance networks in every market.
Private exchanges evaluate national and regional carriers and contract with the best. An exchange with comprehensive geographic coverage provides access to high-performance provider networks, regardless of where employees live. This translates into lower costs for both employers and employees.
2. Private exchanges can increase employee engagement.
Private exchanges engage employees more directly in purchasing health insurance. Employees use an exchange’s decision support tools to navigate this greater range of choice in carriers, plans and price points to pick coverage that best suited to their needs. Some exchanges then go a step further to provide insight into how much care costs so employees can be motivated to price shop for medical services, do a better job of managing existing health conditions and make lifestyle changes that decrease their health risks.
3. Private exchanges can help employers add new benefits quickly and efficiently.
Some private exchange models offer pre-built options for ancillary benefits such as wellness, care management, and dental, vision and disability coverage. Through a private exchange, employers can add new benefits rapidly as well as offer benefits that would not be possible on their own.
4. Private exchanges can reduce compliance and administrative burdens.
Companies must ensure that their programs keep up with changes mandated by health care reform. Outsourcing health benefits to a private exchange lets employers retain control over their benefits and frees up Human Resources staff for more strategic activities.
Economists do not predict a significant increase in inflation through 2020. So as benefit costs increase, employers seeking ways to maintain a competitive advantage in the war for talent without breaking the bank could turn to private exchanges in greater numbers.