Employers focusing on health care costs and inequities in 2023

Employers will have a greater focus on affordability in 2023, according to a Business Group on Health survey looking at trends to watch for next year.

“While each trend relates to employer health and well-being strategies, they also exist against the backdrop of the global economy, workforce trends, innovation, and the policy and regulatory environment,” said Ellen Kelsay, president and CEO of Business Group on Health, in a statement. “As such, factors that range from provider labor shortages to the increased cost of health care will affect employers and employees alike in the year to come.”

The trends to watch, according to the Business Group on Health, are:

1. Affordability

Employers in 2023 will face above-average increases in health care costs, driven in part by pent-up demand for medical services. According to the Business Group’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey, 43% of employers have already witnessed an increase in medical services due to care delayed during the pandemic, and another 39% anticipate seeing the same in the future.

In addition, cancer is now the top condition driving health care costs, as more late-stage cancers are identified and more expensive treatments are available. To address affordability, these cost pressures are not being passed on to employees via increases in premiums and out-of-pocket costs. For the most part, employers are absorbing these increases; employee cost sharing remained virtually unchanged in 2022. As the economy continues to fluctuate, however, the ability for employer plans to absorb escalating health care costs may soon reach a limit.

2. A focus on health and well-being offerings

Businesses will continue to invest in health and well-being offerings, as part of their long-term strategy. However, challenging situations are impacting affordability, likely leading to a reprioritization of initiatives, new partnerships and collaborations with employees to ensure relevant and high-quality offerings.

Employers increasingly recognize the positive impact of health and well-being on their overall workforce strategy, with 65% viewing it as having an integral role, up from 27% just five years ago.

3. Employers will address health inequities

Long focused on addressing the needs of marginalized and under-resourced populations within their workforces, employers will continue to focus on Social Determinants of Health through their health and well-being programs, with an emphasis on health care access, finances and income, and childcare.

Further, employers will continue to address health equity by expanding coverage and benefits for neurodiverse populations and transgender individuals in their workforces. There is also increased recognition for making disability inclusion a key part of Diversity, Equity and Inclusion (DEI) initiatives.

Employers plan to prioritize women’s health in very specific ways related to reproductive care as well: expanding fertility benefits to cover all types of families, addressing maternal mortality for under-resourced populations, and increasing coverage for doula services for expecting parents.

4. Programs that support people in tough times will become even more critical.

Mental health, a top priority for employers and employees, is viewed as inextricably linked to other dimensions of well-being, including physical, financial and social health, as well as job satisfaction.

Recognizing increasing financial pressures, 94% of employers have a financial component as part of their overall well-being strategy. While retirement savings is still a major part of financial well-being, many employers now offer tools and resources to support challenges such as saving for emergencies, paying down debt, creating a household budget, gaining early access to earned wages and paying for college.

This broad view of employees’ financial lives is based on the understanding that stress about money affects employee physical and mental health, productivity and performance.

5. Value-based care

As a result of factors such as rising health care costs, disappointing patient experiences, and subpar outcomes, employers and others are eager to a move toward value-based payment models, which tie provider reimbursements to improved patient experience, cost mitigation and better outcomes.

Advanced primary care, high-performance networks, accountable care organizations and centers of excellence are examples of such payment models, which are needed for both in-person care settings and virtual care.

When the primary driver of financial success is keeping patients healthy – rather than billing for services – providers are more inclined to deploy team-based care. Evidence also suggests that when providers are motivated to improve care for all patients, their performance on quality metrics can improve while simultaneously reducing disparities in outcomes.

6. Virtual health is at a critical crossroads.

Prior to the pandemic, virtual health, which includes telehealth for primary and acute care, teletherapy, chronic condition management, navigation services and others, gained momentum as an alternative to in-person care. Now, however, virtual health is increasingly viewed as complementary to in-person care.

According to the Business Group’s 2023 Large Employers’ Health Care Strategy and Plan Design Survey, 55% of employers will bolster their virtual health offerings, despite concerns that these contribute to a fragmented and complex system.

In the year 2023, virtual health could undergo transformation as employers, vendors and consultants collaborate to achieve improved virtual health offerings and outcomes.

7. Policy and regulation will impact access to health care.

Across the United States, next year promises some uncertainty regarding state vs. federal requirements and restrictions for employer-sponsored plans. In addition, long-standing precedents such as ERISA preemption and Affordable Care Act preventive services are under judicial review, which employers will need to navigate. The nation’s working families will benefit from ongoing employer engagement and the value and stability of employer health and well-being programs.

The Business Group also anticipates that large employers will seek opportunities to partner with policymakers on such issues as improving access and affordability for mental health, women’s health, pharmaceuticals and other medical needs, as well as transforming delivery through transparency and payment model reform.