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According to the 2010 KFF Employer Health Benefits Survey, employers paid an annual average of $4,150 per single coverage plan and $9,773 per family coverage plan.1 Fast forward to 2022, and these yearly costs have increased to $6,584 for single and $16,357 for family coverage.2 This approximate 60% increase in insurance premiums affected employees as well — the employee portion for coverage went from $899 per single and $3,997 per family plan in 2010 to $1,327 and $6,106 in 2022.34
With nearly 155 million Americans covered by health insurance and insurance premiums expected to rise at an even more rapid rate, both employers and employees have a vested interest in limiting costs where possible.56 Here are seven methods to consider for controlling healthcare costs:
1. Healthy workplace culture
Healthcare cost reduction starts with making health a part of the company culture. This shift can begin by ensuring employees are well-educated about their benefits packages and how they may use their benefits to achieve better health. The degree to which the plans are utilized will depend on what is included in the employee health plan and how these resources, including primary care, mental healthcare and chronic condition support, address factors affecting employee health.
To encourage the use of employee benefits and promote this health-oriented mindset, employers should implement various strategies. Organizing group activities and challenges around healthy pursuits, for example, have the dual benefits of building a culture of health and fostering better team rapport. This specific strategy may include activities like company sports teams, company-wide walk or bike to work challenges, team hydration goals, complimentary nutritious lunches for team meetings, and more. As all workforces are unique, employers must carefully consider their own before selecting the right strategies to appeal to their employees.
Now, shifting company culture does not happen in a day and is not simply achieved through leadership mandates.7 To truly generate a health-minded culture, employees of all levels must be aligned and willing to embrace it to the degree that it becomes a habit. Everyone from C-suite executives to entry-level employees should feel encouraged to put health at the forefront of decisions and include healthy pursuits in day-to-day conversations. Motivating employees to use health benefits to build a healthy lifestyle is an important start to gaining control of healthcare costs. However, remember to be patient, as shifts in company culture, mindset and lifestyles take time.
2. Wellness initiatives
Minimizing healthcare costs goes hand in hand with reducing the need for care. While certain healthcare needs are unavoidable, like sudden injuries or pre-existing conditions, many aspects of health are heavily influenced by habits. As they relate to our lifestyle, the power of habits is why wellness programs are such an influential tool for employee healthcare costs.
Wellness programs are services promoting health and wellness that do not fall within the classic healthcare category. Employee wellness programs can involve a range of elements, most of which provide opportunities and incentives to build healthier habits and reduce risk factors. For example, gym membership subsidies encourage exercise, which helps reduce the risk of diabetes and heart disease, thereby lessening the approximate $117 billion spent annually on physical inactivity-related healthcare.8 Most wellness services are also customizable to suit the unique needs of each workforce, as some employees may want to learn about better nutrition, while others could be on the verge of burnout and in need of stress management counseling.
If the primary purpose of wellness programs is to cultivate happier and healthier employees, then the bonus benefits are reduced healthcare costs and increased employee productivity. One World Health Organization-led study found that every dollar invested in depression and anxiety support leads to a four-dollar return in better health and productivity.9 Ultimately, a well-implemented wellness program serves the interests of employees and employers.
3. At-home health testing
According to a report by Lancet Public Health, over 25% of healthcare spending in the U.S. is attributable to preventable illnesses.10 Two of the most common preventable conditions, heart disease and stroke, account for around $216 billion in healthcare costs and $147 billion in lost job productivity yearly.11 As these rates will undoubtedly increase with other healthcare-related costs in the coming years, implementing preventative practices is essential for reducing total costs.
Of the numerous technological innovations in the preventative health and wellness market, at-home testing is particularly useful for employers and employees alike. At-home testing provides a high level of accessibility, which makes it easier for employees to monitor their health status regularly. Increased awareness enables them to strategically shift their health efforts, track improvements and catch potential health concerns before they deteriorate. These test results can provide peace of mind or prompt individuals to make important follow-up appointments with their healthcare providers.
imaware's tests allow individuals to screen for an array of critical biomarkers, from prostate cancer and thyroid function to diabetes risk and vitamin monitoring, all from the comfort of home.
Outside of routine checkups, at-home tests have other benefits, such as offering more support for recently hospitalized individuals or reducing unnecessary follow-up practitioner visits and the associated fees.12 At-home testing can also create unique remote wellness experiences. Elo Health, for example, is a nutrition service that uses at-home biomarker testing to create personalized nutrition packages.
4. Chronic condition support
Preventative care and other wellness efforts that reduce the risk of chronic conditions are important but remember to include support for existing conditions. Without proper care, chronic illnesses have the potential to become much more serious — unmanaged diabetes is responsible for around 44% of kidney failure13 — and expensive.
Employers still determining the importance of chronic care planning should consider that around 60% of American adults have at least one chronic condition. Furthermore, chronic conditions are the leading drivers of the $1.4 trillion annual healthcare costs.14 This makes providing employees with plenty of chronic condition support and management services a valuable endeavor in controlling total healthcare costs.
The emerging importance of this area is why more chronic condition management businesses are popping up within the health and wellness industry. These providers typically supply users with key health data analysis and specialized coaching to empower patients to improve how they manage their conditions. And as explained previously, better management can greatly reduce patient costs. Omada Health is one such provider that claims to have led to medical cost savings of approximately $1,169 per member within the first year of use.15
5. Educational services
A key part of building a cost-effective health plan is providing the necessary resources for employees to understand their benefits, coverage and cost-saving options. In a 2019 Health Insurance Literacy Survey, more than one in four respondents said uncertainty about their coverage caused them to avoid treatment.16 This lack of awareness can result in wasted funds on unused coverage and health conditions worsening to more serious and pricey treatment points. Employees will also lack the ability to find strategic ways to reduce treatment expenditures. More informed employees can make more effective decisions about their care by better utilizing what is available and at lower costs.
Helping employees make informed decisions is also supported by healthcare services, like nurse advice lines and other forms of telemedicine. From 2016 to 2021, the number of firms with health plans that cover telemedicine increased by approximately 55%.17 Virtual services, like telemedicine, provide flexible convenience and may reduce healthcare spending by limiting the number of visits to urgent care clinics or emergency rooms.18
6. Reduced treatment spending
Controlling treatment spending plays a direct part in controlling healthcare costs, and here are two main areas to consider targeting: the number of treatments and types of treatments being administered. Assessing treatments received can bring attention to possible unnecessary healthcare services, which, according to the National Academy of Medicine, waste about $210 billion annually.19
A more proactive step in reducing the number of treatments is building greater awareness among patients. As mentioned in the previous section, educational resources and healthcare provider connections can help employees understand what they do and do not require treatment-wise. Additional services, like at-home health testing, provide employees with valuable health data to make better-informed decisions.
Treatment costs can also be controlled through strategic spending in the pharmaceuticals department, which is quickly becoming a major portion of total employer healthcare costs.20 Consider switching to biosimilars — safe and effective treatment options similar to their counterparts — or generic drugs, which have identical chemical compositions to their brand-name alternatives.21 In 2020, the U.S. healthcare system saved approximately $338 billion just from using biosimilars and generic drugs because these products are typically available at much lower prices.2223
7. Data utilization
Finally, analyzing benefits data, from claim types to employee feedback, will provide more clarity and control over total healthcare spend and usage. For example, using claims data to highlight the most common and expensive conditions among employees can identify areas of their health coverage that can benefit from more targeted preventative measures.24 Usage data can also indicate what parts of the benefits to keep, what areas may be swapped with more cost-effective options and what must be altered to serve employees better. Comparing this data against regional or national norms will call attention to claim abnormalities, like treatments that require a reevaluation or areas where reduced spending is possible.
Requesting employee feedback and reviewing usage data can also help identify barriers to access, top health concerns amongst employees and other issues with the current plan. Monitoring and adjusting healthcare spending to reach peak efficiency can help control costs and increase employee satisfaction with the health plan.
Final thoughts
Many of these strategies, particularly concerning company culture and lifestyle changes, may take time to generate savings. Still, as healthcare in the U.S. continues to rise, spending the time and effort to create and administer an effective cost-control strategy has the potential to benefit both employers and employees greatly over the long term.
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Imaware offers custom at-home testing so that you can provide your employees with a sophisticated and convenient health experience.
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