Tackling Healthcare Inflation: 3 Effective Employer Tactics
We’ve got some news for you – both good and bad. The good news is that inflation is cooling down, and we can anticipate a decline in consumer prices this year. However, while general inflation may be subsiding, its impact is shifting to health insurance costs.
If you’re a business owner or an HR professional, you’re likely grappling with rising healthcare costs. Many are concerned about providing adequate health insurance coverage while dealing with labor shortages. In 2024, healthcare inflation continues to pose significant challenges for employers of all sizes.
Featured Topics:
- Employer Tactic No. 1: Designing Health Insurance Plans
- Employer Tactic No. 2: Exploring Alternative Healthcare Delivery Models
- Employer Tactic No. 3: Employee Education and Wellness Programs
Healthcare costs have been rising at a faster pace than the overall cost of living. This creates a burden for businesses of all sizes and across industries. The annual employer health benefits survey shows a significant uptick in the average cost of employer-offered family health insurance. In fact, this increase of 7% marks the highest rate increase in a decade. This brings the average cost of employer-sponsored family health insurance to $23,968.
The impact of healthcare inflation is particularly felt in the current labor market. With a shortage of qualified workers, employers face increasing pressure to offer competitive benefits packages, including comprehensive health insurance coverage. However, the rising healthcare costs make it more challenging for businesses to meet these demands without sacrificing other vital resources.
For business owners and HR, finding effective tactics to manage healthcare costs while attracting and retaining top talent is essential. The goal is to balance offering quality health insurance coverage and ensuring the business’s long-term sustainability.
This blog will explore three effective tactics employers can use to tackle healthcare inflation.
Employer Tactic No. 1: Designing Health Insurance Plans
Analyzing employee demographics is the first step in designing health insurance plans that meet their needs. Data on your employees’ age, gender, and health status can provide insights into their healthcare requirements. For example, a high-deductible health plan paired with a health savings account (HSA) might suit a younger workforce. Meanwhile, offering a range of plan options with different coverage levels would work if your employees have diverse healthcare needs.
One popular option for designing health insurance plans is implementing high-deductible health plans (HDHPs). Typically, these types of plans have lower monthly charges but higher deductibles. High Deductible Health Plans (HDHPs) are frequently combined with HSAs, enabling employees to contribute pre-tax money towards their out-of-pocket costs. This appeals to employers and employees as it encourages cost-conscious decisions and allows employees to save for future healthcare needs. Employers can also contribute to employee HSAs, further incentivizing participation in these plans.
You can also consider integrating telehealth services. Telehealth allows employees to access healthcare remotely through virtual consultations with healthcare providers. This provides convenient and timely access to care and can help reduce unnecessary visits to emergency rooms or urgent care centers. Implementing telehealth services can lead to cost savings for both employers and employees by lowering healthcare utilization and associated expenses.
In addition to these tactics, a recent study by Mercer found that almost half of the large employers surveyed (49%) are implementing specialized programs that target specific health conditions.
Employer Tactic No. 2: Exploring Alternative Healthcare Delivery Models
Employers increasingly turn to alternative healthcare delivery models to manage expenses while maintaining quality employee coverage. These innovative approaches to healthcare delivery offer potential cost savings and a range of benefits for both employers and employees.
On-Site Clinics
On-site clinics are medical facilities located within or near the workplace. They are staffed with healthcare professionals and offer employees a range of primary care services. By providing convenient access to healthcare services, on-site clinics can help businesses reduce healthcare costs by minimizing the need for employees to seek care outside the workplace. Employees can receive timely and preventive care, improving health outcomes and reducing healthcare expenses in the long run.
Direct Primary Care (DPC)
In a DPC model, employees pay a fixed monthly fee directly to a primary care provider or clinic. This fee covers a comprehensive package of primary care services, including unlimited office visits, preventative care, and basic diagnostic tests. By cutting out the intermediaries, such as insurance companies, employers can often negotiate lower rates for DPC services. DPC providers can offer more personalized care, longer appointment times, and enhanced access to healthcare professionals. This model reduces costs by eliminating unnecessary administrative overhead and provides employees with more focused and comprehensive primary care.
Concierge Medicine
Concierge medicine is another alternative healthcare delivery model that provides personalized, high-quality care. Under a concierge medicine model, employees pay an annual fee or retainer to a primary care provider or medical practice. In return, they receive enhanced access to the provider, including longer appointment times, 24/7 availability, and more personalized care. This model allows employees to have a closer relationship with their healthcare provider and receive care curated to their needs. Moreover, concierge medicine emphasizes preventative care and early intervention. Thus, it can help lower healthcare costs by reducing the need for costly emergency or specialty care.
These alternative healthcare delivery models offer employers potential cost savings by reducing healthcare expenditures and improving employee health outcomes. Employers can help employees access timely, cost-effective care through convenient on-site clinics or direct primary care. This, in turn, can reduce hospitalizations, emergency room visits, and other costly interventions. Additionally, offering these convenient and high-quality healthcare options helps boost employee satisfaction and recruitment efforts.
Employer Tactic No. 3: Employee Education and Wellness Programs
Invest in initiatives that promote employee health and encourage healthy behaviors to improve employees’ well-being and reduce long-term healthcare costs.
Employee Education
Employee education is a crucial component of any comprehensive healthcare strategy. Many employees are unaware of the role of preventive care in maintaining their health and detecting health issues early on. Knowing the benefits of regular check-ups, vaccinations, and screenings can empower them to take a proactive approach to their health. This can lead to fewer health problems, reducing healthcare expenses associated with treating advanced or chronic conditions.
Wellness Programs
Wellness programs are another effective tool for promoting employee health and controlling healthcare costs. These programs encourage healthy lifestyles and address common health risks like obesity, stress, and sedentary behavior. You can implement fitness challenges, offer gym memberships or fitness classes, or provide resources for healthy eating. Employers can reduce the risk of chronic diseases by supporting employees in making positive lifestyle choices and improving overall well-being.
Wellness programs that have proven successful include tobacco cessation, mental health support, and stress reduction initiatives. Tobacco cessation programs can help employees quit smoking, which reduces the risk of smoking-related illnesses. Mental health support services, like access to counseling or therapy sessions, can assist employees in managing stress, anxiety, or depression. This improves their well-being and ability to perform at work. Stress reduction initiatives, such as mindfulness programs or stress management workshops, can help employees cope with work-related pressures better.
The positive effects of wellness programs go beyond employee health. These initiatives can also boost morale, increase employee engagement, and foster a positive work culture. Investing in the well-being of your workforce sends a clear message that their employees’ health and happiness are valued. These positive outcomes contribute to improved employee retention, reduced absenteeism, and a healthier bottom line. If you want insight on employee education and wellness programs, contact Workforce Solutions.
Improving Health Outcomes Amid Healthcare Inflation
As the cost of medical services, prescription drugs, and hospital care continues to increase, brace yourself for the impending rise in rates when enrolling for the 2024 health insurance plans. By then, employers like yourself will be forced to make difficult decisions about best providing coverage to their employees without compromising other aspects of the business. Thus, it is essential to plan and explore practical strategies to manage healthcare inflation, specifically the ones we just discussed:
- Designing health insurance plans
- Exploring alternative healthcare delivery models
- Implementing employee education and wellness programs
Don’t face the challenges of healthcare inflation alone! Reach out to MBE CPAs today and take proactive steps towards improving health outcomes while mitigating the financial impact on your organization. Together, we can develop a comprehensive approach to managing healthcare costs and ensure a healthier future for your employees and business.