Employers are reevaluating health benefits amid tight labor market, survey finds

Dive brief:

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  • Facing worker recruitment and retention challenges in a tight labor market, almost two-thirds of U.S. organizations (64%) plan to boost efforts to address employee healthcare affordability over the next two years, a survey from Willis Towers Watson found. The response comes as healthcare costs show signs of accelerating, the advisory firm said Tuesday.
  • Almost all employers (95%) in the survey said they expect to offer virtual care to meet demand for medical and behavioral health services, and 87% of respondents said improving mental health benefits is a top priority.
  • Even as employers take steps to address rising costs, confidence in sponsoring healthcare benefits over the next decade is at its highest level in more than 10 years, according to WTW, a global advisory and broking company. The poll of 636 employers showed 84% were very confident that their organizations would still be offering healthcare benefits 10 years out, compared with 38% who were very confident in 2011. 

Dive insight:

Employers are having to navigate a host of challenges in 2022 including accelerating inflation and healthcare costs. They're also facing difficulties attracting and keeping workers and a worsening mental health picture for employees and their families as the pandemic has taken a toll, WTW said. “Many employers find themselves in the middle of a perfect storm,” Lindsay Hunter, the firm's senior director of health and benefits, said in the report.

The cost per employee of employer-sponsored health insurance jumped 6.3% last year in the highest annual increase since 2010, according to a survey released late last year from Mercer. The consulting firm said it was unclear if the surge was temporary, resulting from patients resuming care delayed due to COVID-19 or represented the start of a new period of higher cost growth.

A number of organizations including employer groups and outside health ventures, seeing a need for fresh solutions to the persistent problem of rising healthcare costs, are looking to disrupt the industry with new approaches to save employers money without reducing care access or quality.

About nine out of 10 (94%) of employers surveyed in the WTW poll identified managing healthcare benefit costs as their No. 1 priority over the next two years. When asked about the biggest hurdles they see for their healthcare strategies, 73% cited increasing prices due to inflation and provider consolidation. More than half (54%) said lack of employee awareness about where to find programs to support their needs is a key challenge.

Employers "are looking for ways to make healthcare more affordable for themselves and their employees,” Hunter said.

Strategies to improve affordability include boosting quality and outcomes (55%) and adding or expanding low- or no-cost coverage for some benefits (41%). About a third (32%) of employers also expect to make changes to their employees’ out-of-pocket costs over the next two years, while 21% expect to revise health plan payroll contributions.

The shift to remote work during the pandemic has contributed to more mental health struggles among employees and their families, WTW said. In response, two-thirds of employers said ensuring that their health and well-being programs support remote workers will be a key priority over the next two years, and 62% plan to enhance programs for family members.

Virtual care likely will become a long-lasting feature of employers’ healthcare strategies as the pandemic subsides, WTW said. The survey found 55% of employers think expanding virtual care will help decrease healthcare costs, and 50% believe it will improve outcomes.

WTW expects more employers will embrace virtual care for services such as physical therapy and lactation counseling, to better manage costs.

This article was written by Susan Kelly from Healthcare Dive and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to legal@industrydive.com.

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