Employers Exploring New Health-Care Options

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By Genevieve Douglas

Aug. 17 — In the face of growing health benefit costs and the ongoing competition for talent, an increasing number of employers are investigating innovative strategies for delivering and funding health-care benefits, including telemedicine, according to the findings of a recent survey from Arthur J. Gallagher & Co.

Employers are continuing to see rising health-care costs, Bill Ziebell, executive vice president of the insurance brokerage and risk management firm, told Bloomberg BNA Aug. 16. “They aren’t going away, they aren’t diminishing.”

For employers of every size and industry, this is becoming a sustainability issue, because past strategies aren’t containing costs. Therefore, HR departments are increasingly pursuing more aggressive tactics to bring down costs, Ziebell said.

Gallagher Benefit Services Inc., the employee benefits consulting and brokerage arm of Arthur J. Gallagher & Co., conducted its “2016 Benefits Strategy & Benchmarking Survey” between January and March of this year. It includes responses from 3,107 organizations across the U.S. According to the survey’s findings, several approaches to reining in health-care costs are poised for significant growth by 2018, including:

  •  Telemedicine, now used by 24 percent of employers to provide employees with quick access to affordable care, is predicted to reach 42 percent by 2018;
  •  Narrow network health-care plans that limit the number of providers, preferably based on quality of care and cost-effective outcomes, show a growth trend from 18 percent in 2016 to 27 percent in 2018;
  •  Consumer-directed health plans are forecast to rise in employer use from 36 percent in 2016 to 51 percent in 2018; and
  •  Self-insuring, another increasingly popular method of reducing costs, is expected to grow from 28 percent in 2016 to 38 percent in 2018.

Health-Care Delivery Via Telehealth

Employers like telemedicine, also known as telehealth, because it can improve access and convenience, and lower costs, attorney Nathaniel Lacktman, leader of Foley & Lardner LLP’s telemedicine and virtual care practice in Tampa, Fla., told Bloomberg BNA Aug. 17.

In addition, telehealth can reduce absenteeism, maximizing employee productivity, Lacktman said. The most common use of telehealth services is as an alternative for employees who otherwise would choose to go to urgent care facilities, walk-in clinics or primary care physicians for acute medical issues. Doctors’ offices are often only open during working hours, so telehealth services can alleviate the need for employees to take leave for medical appointments or stay home until they can see a doctor, Lacktman said.

Telehealth benefits and services can save money in the long term because they tend to have lower fees for visits and copays are on a per-consult basis, he added.

The hard part of rolling out a telehealth plan for employees is getting them to use the services, just as it can be for participation and engagement in wellness programs, he said. The main factor that drives use of these services is providing as low a copayment as possible, Lacktman said.

New Funding Strategies

Employers’ top concerns are attracting and retaining a talented workforce and controlling benefit costs, but “those two goals may not be aligned,” Ziebell said. While changing the delivery of health care may address the cost issue, just how health-care benefits are funded is also a piece of the puzzle employers should address.

For example, consumer-driven health plans continue to grow, and while this isn’t a new solution, it has yet to be fully taken advantage of, Ziebell said. Self-insurance is another potential solution, he said. This option can be more risky for employers, but it gives them flexibility with benefits offered.

Narrowing health-care plan networks is another option employers are exploring, which is effective when it comes to cost but also limits choices for employees, Ziebell said. These kinds of plans can be less popular, and having fewer choices has been historically something that workers don’t embrace, he cautioned.

Defined contribution arrangements for health plans is yet another option, and they operate like defined contribution pension plans, Ziebell said. In this model, there is a set amount of money for health benefits provided to the employees, with the company matching that amount, and then health plan options are offered to employees through a private exchange.

Overall, Ziebell said, flexibility is key. For example, a private exchange would give employees more options in their health-care plans with a wide variety of coverage. Employees entering the workforce may not need as much coverage, whereas those closer to retirement may want more coverage, he said. Additionally, Ziebell said, when given the choice, people tend to buy less health insurance and are saving anywhere from 7 percent to 9 percent in medical benefit costs.

To contact the reporter on this story: Genevieve Douglas in Washington at gdouglas@bna.com

To contact the editor responsible for this story: Tony Harris at tharris@bna.com

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