January 7, 2021 | Human Resources | Posted by Alera Group
3 Total Reward Changes Employers Should Be Evaluating to Adjust to the Demands of the New Workplace
COVID-19 has disrupted everything, as we knew it, perhaps more significantly than anything else in many of our lifetimes. To shine a light on what employers are doing to capitalize on this disruption to look at doing Total Rewards in a new way, we’ve highlighted three actions employers can take (and are taking) to adjust to the current state.
1. Increasing Virtual Access
As a result of COVID-19 many employers have found new ways to get the job done with employees working remotely. Likewise, many healthcare providers have expanded their telehealth offerings, including an expansion of mental health care. Beyond the expanded need for virtual care, employers must adapt and evolve to a new way of providing education (onboarding, training, employee benefits) and building culture through different channels (virtual bingo, cooking demonstrations vs. potluck get-togethers).
The American Hospital Association (AHA) reported that one telehealth provider has seen between a 1,000-4,000% increase in telehealth usage since the beginning of the year (Virtual Care’s Post-COVID-19 Future Comes into Focus | AHA, 2020). The AHA encourages all of us to watch for the following:
- Continued telehealth services as an option to protect patients and staff from COVID-19
- Expanded virtual interactions for both primary and specialty care to maintain continuity of care and avoid negative consequences of delayed care
- Partnerships with rural and general acute care hospitals to create new access to specialty and subspecialty services
- Offer specialty consults directly to consumers who are hesitant to travel during the pandemic
- Use tele-ICU to monitor patients to enhance outcomes, maximize use of staff and reduce the use of personal protective equipment
2. Increasing Employee Well-being Efforts
An Employee Benefit Adviser article reports that 42% of Americans reported symptoms of anxiety and depressive disorder in November alone, and as a result 72% of employers stated they planned to introduce more mental health support (great ideas for expansion can be found here, Companies Offering More Mental Health Benefits Amid Coronavirus). Through a collaboration of Harvard, Northeastern University and Rutgers University, a study was released in November, The State of the Nation: A 50-State COVID-19 Survey. Researchers found that nearly half of 18 to 24 year-olds are “showing at least moderate depressive symptoms,” and for many that comes with suicidal thoughts (36.9 percent, compared to 3.4 percent of the broader population); continuing to support the need for expanded, holistic support for employees.
With the increase of stress, anxiety, fear and lack of clear path for making the “right” decision, individuals attempt to balance work and home life during the pandemic with an entirely new set of challenges in front of them. Continuing beyond 2021, we can expect employers to focus on a more holistic scope of benefits that support the evolving needs and changing life demands of their employees - financial, physical and mental health, flexibility, community, connections, and more. Employers who continue to see success with supporting their most valuable asset will look differently at employee benefits going forward.
3. Focusing on Cost Management vs. Cost Shifting
As healthcare costs have continued to rise at a pace that exceeds wage growth, we are rapidly approaching a point where even healthcare purchased through the employer is unaffordable for a portion of our population. This reality is driving the conversation away from cost shifting and back to true cost management, much of it focused on prevention of cost vs. management of cost.
This chart, adapted from The Cost-of-Thriving Index: Reevaluating the Prosperity of the American Family Report shows the convergence of cost versus income (pre-pandemic) which is driving a new conversation for employers who look to change the portions of this picture that are in their control.
Cost containment strategies that are focused on long-term durability will be more focused on improving outcomes (improved health, improved affordability, improved access) than they are on continuing to ride the wave up and increasing the cost share for employees. Employers who want to focus on what is in their control in this picture will engage their employees (and their families) in a different dialogue that supports high-value access to care. By providing education, advocacy and financial incentives, employers are flipping the script and creating a holistic care picture that improves lives, improves costs, and improves outcomes.
Keeping an Eye on Cost Projections
The COVID-19 pandemic has created new opportunities and new challenges for employers. As they seek to budget and project costs for their total rewards benefits in the future there are some indicators of what to expect in 2021; for many employers, health insurance is at the top of their expense list but is more critical than ever to offer.
Trend: The Rising Cost of Care
According to PwC’s Health Research Institute, medical cost trend (the estimated percentage increase in the cost to treat/provide care from one year to the next, assuming benefits will remain the same) has ranged from 11.9% (2007) to 6.0% (2020). In their study, Medical Cost Trend: Behind The Numbers 2021, PwC normalizes for the unique year of spending and provides three projected paths for medical cost trend in 2021.
Pharmacy Cost Containment
Pharmacy costs have dominated the cost conversation for the past few years with many employers seeing pharmacy spend take over as a majority of their cost. While the cost drivers are multi-fold there is a strong regulatory and employer-driven effort to make change going forward.
The Centers for Medicare and Medicaid Services (CMS) released their National Health Expenditure (NHE) Projections 2019-2028 their projections for the United States National Heath Expenditures (NHE). Looking out to 2024, CMS expects that the growth rate for drug spending will catch up to growth in overall healthcare spending this year. This is due to faster price increases, higher growth in utilization, and slower growth in rebates.
There will be unknown disruption to the pharmacy market through some of these notable 2020 items:
- Amazon Pharmacy
- Rx Transparency Executive Order
- COVID Vaccine
Most medications in the pipeline are specialty drugs, many of which are curative gene therapies that could come with multimillion-dollar price tags, and existing specialty drugs are driving spending as the conditions for which they are approved expands (Medical cost trend: Behind the numbers 2021, 2020).
Self-insured employers and payers should evaluate their ability to cover new, high-priced therapies and deeply evaluate their strategies for cost containment related to pharmacy spend without compromising the health outcomes for their members – looking toward innovative strategies and strength in contract with their Pharmacy Benefit Manager.
As with any disruption, the COVID-19 pandemic has brought new opportunities for employers to take control and address how they support the health and wellbeing of their employees through programs and solutions that increase access and improve livelihood.
Based in Deerfield, IL, Alera Group’s over 2,000 employees serve thousands of clients nationally in employee benefits, property and casualty, retirement services and wealth management. Alera Group is the 15th largest privately held firm in the country. For more information, visit www.aleragroup.com or follow Alera Group on Twitter: @AleraGroupUS.