Many U.S. employers are reassessing employee health benefits programs as part of a trend industry insiders call “the Great Re-Evaluation.” According to recent data, rising costs are a big factor behind this trend:
Industry-wide, sobering statistics like these reflect the biggest rise in employer health care costs in more than a decade.
Employers of all sizes continue to grapple with rising medical and prescription costs due to impacts from inflation, advances in medical technology, greater availability of specialty drugs, and an aging population, to name only a few. In response, HR professionals and employee benefits specialists are spending considerable time analyzing their current vendors, partners, and technologies to re-evaluate the value of their existing benefits programs.
In its 2024 Large Employer Health Care Strategy Survey, the Business Group on Health cites re-evaluation as one of the top three focus areas for large employers next year, stating specifically that “employers are evaluating partnerships and vendors to ensure they create value and result in higher quality, cost-effective services.” According to the survey, that includes companies holding vendors more accountable for transparency in terms of both results and costs.
Pre-pandemic, as more data emerged on the benefits of preventive health initiatives, employers focused on creating robust wellness programs, seeking better health outcomes from engagement in proactive health initiatives, navigator solutions, and digital apps.
Post-pandemic, employers have yet to realize these projected gains from their large portfolios of point solutions and programs. A lack of integration between tools and technologies and an excess of primarily superficial data have failed to deliver the deep insights needed to develop cost-effective benefit strategies. In many instances, point solutions have de-aggregated programs that should be aggregated. Worse, many companies are not seeing the desired health outcomes as a result of their investments.
As we look down the short road to 2024, more benefits specialists and consultants are analyzing every part of their employee benefits programs to determine individual and aggregate return on investment (ROI). As noted in a recent article from SHRM, this includes taking a strategic look at employer benefits packages to evaluate what they're offering, and whether those benefits resonate with their workforce.
This shift from evaluating value on investment (VOI) to ROI reflects a growing need for data on crucial metrics like employee engagement, health outcomes, health equity, and other benefits-based KPIs, particularly from point solutions. This includes one segment of the employee population that holds unparalleled opportunity when it comes to maintaining costs while boosting health outcomes.
In the Mercer study, over 80% of respondents reported that managing high-cost claimants is their top priority for 2024. While keeping a close eye on claim costs is always a good practice, the Great Re-Evaluation reflects an equally important focus on deriving more value from employee benefits programs for the entire population.
Reaching unengaged employees is one of the best ways to move the needle on this crucial metric and help demonstrate employee benefit programs’ ROI more concretely. Stronger employee engagement empowers individuals to make informed health care choices, leading to better health outcomes and overall well-being. High engagement rates translate so clearly to greater employee well-being that Gallup now states “net thriving employees” as one of the most important KPIs for workplace productivity. Yet true measurement of value goes beyond superficial engagement like clicks and views. It needs to be calculated using much deeper metrics.
“It's not just about offering robust programs. Employees are overwhelmed with too many siloed point solutions, which makes it challenging to understand, access, and use their health benefits effectively,” says Sarah Ziemer, Senior VP of Sales at MOBE. “Increased engagement requires innovative, targeted strategies based on data that helps us reach the right people, at the right time, with the right benefits. That’s the real key to reaching less engaged employees.”
— Sarah Ziemer, Senior VP of Sales at MOBEThe right people, at the right time, with the right benefits.
Navigating the Great Re-Evaluation requires a significant shift in mindset, which includes:
• Gaining deeper knowledge of employee wants and needs. Understanding the diverse needs, preferences, and challenges within specific employee populations is crucial to developing health benefits programs that resonate with the workforce.
• Reducing complexity and creating greater accessibility. Enhanced accessibility means that information and services related to health benefits are presented in a manner that is clear, understandable, and easy to navigate.
• Incorporating more meaningful employee data. Demanding more meaningful data from technology vendors and programs, and focusing on integration, will inform better strategies now and in the future. Better informed benefits strategies lead to higher engagement levels and quantifiable business outcomes.
“With strategic support from skilled HR consultants and brokers, employers are doubling down on evaluating their health benefits, including point solutions. There’s a greater focus on ROI and a push to eliminate silos so we can all drive better outcomes. In the face of rising costs, there is a stronger need to justify investments. We’re also identifying new and better ways to reach and support employee populations by looking past vanity metrics to true measures of value.” – Bria Gali, VP, Alliances & Consultant Relationships, MOBE.
— Bria Gali, VP, Alliances & Consultant Relationships, MOBEIn the face of rising costs, there is a stronger need to justify investments.
In today’s employee benefits landscape, real return on investment isn’t just a financial consideration. ROI reflects the benefits of comprehensive programs that are accessible, inclusive, and highly engaging. To achieve that, those programs must deliver more meaningful employee data.
It’s clear that benefits professionals face a daunting set of goals in 2024, not the least of which include:
It’s a good idea to remember, however, that although the Great Re-Evaluation of employee health benefits may be a response to rising costs, the trend is also driving positive shifts in benefits strategies. When implemented successfully, these new strategies will result in significantly greater value for employers, employees, and health programs for many years to come.
