Employers cite healthcare affordability as top workforce concern

Unsustainable healthcare costs thwart employer efforts to attract and retain talent as 73% said it crowds out salary and wage increases, and 82% report it impacts ability to remain competitive. 

These are among the findings of the latest survey of more than 150 employers conducted by the National Alliance of Healthcare Purchaser Coalitions and its members.

The Pulse of the Purchaser study gauged concerns and strategies of employers to address the workforce environment; hospital price and quality transparency; health and wellbeing benefits including reproductive; health equity; and the greatest threats to the affordability of employer-sponsored coverage for employees.

“The consensus among many of the responding employers is that attracting and retaining employees has become a street fight,” said Michael Thompson, National Alliance president and CEO.

Concerns about a recession and runaway inflation only exacerbate the issue, according to the report, impacting the ability to hire and retain top talent. Getting unreasonable health costs under control, said Thompson, has a profound impact on wages and the ability to compete.

WHAT’S THE IMPACT

A number of concerns and strategies emerged. For one, drug prices (93%), high-cost claims (87%) and hospital costs (79%) are the most significant cost drivers of employer-sponsored health benefits coverage for employees.

Employers familiar with transparency tools such as those from RAND, the National Academy for State Health Policy, and Sage Transparency are six to 10 times more likely to strongly disagree that hospital prices are reasonable and defensible, and 93% said that hospital consolidation has not improved cost or quality of services.

In light of hospital pricing practices almost half (47%) of employers are using centers of excellence and within the next 1-3 years many employers are considering tiered networks (46%), site of care (43%), contracting and performance guarantees tied to Medicare pricing, and reference-based pricing (36%).

Approaches that 9 out of 10 employers are currently doing or considering are high-cost claims (94%), mental health and substance use access and quality (94%), hospital quality transparency (93%) and price transparency (91%), and whole person health that covers both physical and emotional wellbeing (90%).

Attraction and retention have been bigger priorities, and most employers (78%) strongly agree it’s an even higher priority post-pandemic, while 100% strongly agreed or agreed that health and wellbeing benefits are critical to achieve.

While two out of three employers permit some form of remote work, the complexity that comes with accommodating a hybrid workforce creates challenges, according to 93% of the respondents.

More than half of employers are currently engaging various departments companywide to discuss company strategies and 41% are reviewing and addressing the role of workplace policies, with another 24% planning to do so, numbers showed.

Meanwhile, for birth control, 93% of employers said they provide coverage, 82% provide coverage of abortion services, and 50% offer coverage of fertility services under the medical benefit. Few are considering eliminating any reproductive benefits in light of the Roe decision. For travel benefits, four in 10 are offering or considering offering it, but the great majority are not limiting that benefit to abortion services.

THE LARGER TREND

Employers of all sizes are looking to bolster their health benefit options in 2023 with an eye toward improving recruitment and retention, and will focus on affordability and access, according to a July Mercer survey.

More than two-thirds of the 700 respondents said they were looking to enhance their health and benefit offerings next year. In all, 61% of participating U.S. employers are conducting surveys on employee benefit preferences.

Meanwhile, average costs for U.S. employers that pay for their employees’ healthcare will increase 6.5% to more than $13,800 per employee in 2023, largely due to economic inflation pressures, professional services firm Aon said in August.

This projection is more than double the 3% increase to healthcare budgets that employers experienced from 2021 to 2022. But it’s significantly below the 9.1% inflation figure reported through the Consumer Price Index.

On average, the budgeted healthcare costs for clients is $13,020 per employee in 2022. The analysis uses the firm’s Health Value Initiative database, which captures information for nearly 700 U.S. employers representing about 5.6 million employees.
 

Twitter: @JELagasse
Email the writer: [email protected]