Innovative Health Cost Saving Strategies Paying Off for Employers

Mercer projects that health benefit cost per employee will rise by 4.1% on average in 2019, down from 6.5% and 5.3% in previous years.

Based on the first 1,566 responses to the Mercer National Survey of Employer-Sponsored Health Plans, Mercer projects that health benefit cost per employee will rise by 4.1% on average in 2019.

Mercer notes that the underlying medical plan cost trend has cooled from 6.5% to 5.3% heading into 2019 (the underlying trend is the estimated increase in medical plan cost if employers made no changes). In past years, common employer cost-control tactics included raising deductibles and offering less generous plans. For 2019, however, fewer than half of the responding employers (44%) will be making these types of changes. But many employers are adopting new technology-enabled tools and solutions to address the root causes of the high cost of health care without cutting benefits or increasing the financial burden on employees.

“The improvement in the underlying medical plan trend is encouraging because those savings are not solely coming from shifting cost to employees,” says Tracy Watts, senior partner and Mercer’s leader for Health Reform. “It suggests that there is a ‘quiet revolution’ going on in organizations as they deploy more innovative health benefit strategies—and that these have started to pay off.”

Mercer has found three technology strategies are key in driving higher-value health care:

  • Target specific health problems. More than half of mid-size and large employers with 500 or more employees (58%) now offer one or more “point solutions,”—high-tech, high-touch programs designed to help members with specific health issues ranging from insomnia to infertility. A targeted program for diabetics, for example, might offer both coaching and an interactive glucose monitor that can transmit data to a provider. Success is measured in quality of life improvement and fewer trips to the emergency room.
  • Make it easy to engage. Today 18% of mid-sized and large employers make all or most of their benefit offerings accessible to employees on a single, fully integrated platform. Another 19% say they are working towards full integration. Like the modern, online shopping experience, an integrated platform helps employees more easily engage with health and well-being vendors and find the resources they need.
  • Mine health plan and employee data for actionable insights. Most employers with 500 or more employees (77%) already use a data warehouse or get the data they need from plan vendors to inform their health plan strategy. But some of these employers (16%) are further ahead, using predictive analytics to identify future opportunities to improve health plan performance—or even health outcomes. For example, claims data can be continuously scanned for clusters of services that indicate a plan member might be heading toward a back surgery, such as multiple trips to a chiropractor followed by a low-back MRI. Timely outreach could help this member avoid unnecessary back surgery—or undergo surgery in a high-quality, cost-efficient setting.

“Employers have realized that it’s up to them to solve the problems of high cost, inconsistent quality, and low satisfaction that plague the U.S. health care system,” says Renya Spak, leader of Mercer’s Center for Health Innovation. “Without question, technology is going to be part of just about every meaningful solution.”

The complete survey results based on responses from nearly 2,400 employers will be released later this year and will look at the full range of strategies employers are using to manage cost.