Issue #17 Competitive Advantages

For this week's Competitive Advantages, I want to do a quick round-up of some notes and then share my top takeaways from the recently released 2022 Employer Health Benefits Survey by KFF. Let's dive in!

Personal experiences challenge my Work from Home stance

I've been pretty team WFH but recently had some impactful in-person meetings. Would they have gone the same way over Zoom? Probably not. But the trade-off was hours of commute time. So I'm torn.

I don't see this debate ending anytime soon. I got some good feedback on this topic in this post last week.

Webinar replay: Reintroducing the Essential Care Process

I hosted a webinar a few weeks ago for benefits and financial leaders on how to break out of the benefits status quo. The typical renewal cycle delivers increasing premiums and worsening benefits. If we do nothing, we'll be facing a benefits disaster in a few more years.

In the webinar, I discussed what's going on in the health insurance market today and ways employers can address their frustrations and issues in controlling health insurance costs. Our Essential Care Process is designed to deliver:

• Benefits that are a competitive advantage (hence the name of this newsletter!)
• Affordable and accessible care
• Quality care that helps employees and their families live healthier lives
• Equitable benefits for all
• Aligned service providers and vendors

Check out the recording here - it's just over 30 minutes and you might learn a thing or two!

My takeaways from the KFF 2022 Employer Health Benefits Survey

KFF (No affiliation with Kaiser Permanente) released its 24th annual survey of trends in employer-sponsored coverage. This survey is a great resource for benefits and financial professionals to better understand what's happening in the employee benefits space, particularly among premiums, employee contributions, cost-sharing provisions, offer rates, wellness programs, and employer practices.

If you are involved whatsoever with your company's benefits, you should pay close attention to the trends going on in the benefits space. Here are my top takeaways, feel free to comment yours!

Increased cost sharing has masked how much healthcare costs have grown

Topline numbers say the average premium for family coverage has increased by 20 percent over the last 5 years and 43 percent over the last 10 years.

While increases in prior periods exceeded workers' earnings and inflation, that wasn't the case from 2017 to 2022. That period saw 17 percent inflation and a 20 percent increase in workers'?compensation, which help alleviate the 20 percent increase in premiums and a 7 percent increase in worker contributions.

But a total picture of employee costs includes both premiums and any cost-sharing. And the average single deductible has increased by 17 percent over the last 5 years and 61 percent over the last 10 years.

On top of that, workers with a single deductible over $2,000 have grown from 22 percent to 32 percent of all covered workers. And among workers in small firms (under 200 employees), that rate is 45 percent for 2022, up from 37 percent in 2017.

Disconnect between telemedicine stats and employer expectations

Firms added telemedicine broadly over the last 3 years and are now ubiquitous across benefits programs. Many firms at least have access to telemedicine through their health insurance and many supplement with a 3rd party vendor like MD Live, Teladoc, First Stop Health, or Galileo.

Despite broad usage, 34 percent of firms expect telemedicine utilization to increase in 2022, while just 14 percent expect it to decrease. But the story from telemedicine providers is the opposite - data from FAIR Health finds an ongoing decrease in telehealth utilization.

In that same article, Alli Oakes of Trilliant has a tough take regarding telemedicine "While telehealth is an exciting frontier, there are somewhat limited use cases where it really ends up providing effective and high-value healthcare services."

Premiums are stable compared to last year despite inflation

While inflation is all over the headlines, it notably has yet to hit health insurance premiums. Yet. There are two suspected reasons for this.

First, these low premium increases may reflect low levels of utilization through the fall of 2021 when premiums were being set.

Second, while 2022 inflation has notably pushed up the price of many consumer goods, we are likely experiencing a lag due to the way healthcare prices reach consumers. Health insurance premiums are based on claims which are based on negotiated rates between networks and providers. These rates are not dynamic and are negotiated way in advance, so premiums reflect contract negotiations from 12-18 months ago.

This is all to say that you should expect 2022 inflation to start hitting health insurance premiums in mid-2023 and beyond.

Growth of utilization for mental health and substance use disorders

45 percent of large firms saw an increase in employees seeking mental health services. Additionally, 43 percent were at least somewhat concerned about the growth of substance use conditions among their employees.

The responses are pretty limited, however. 51 percent of employers offer a self-care app and 85 percent offer an employee assistance program (EAP). This is hardly a solution for the fact that just 52 percent of large employers believe they have a sufficient number of behavioral health providers in their network.

Telemedicine offers a great way to solve behavioral health provider shortages inherent in geographic-based health plan networks and employers know this.

67 percent of employers say that telemedicine will be important or very important in providing behavioral health access, but small firms are less in agreement with this (55% vs 36%).

Ongoing affordability issues

Everything we looked at points how an ongoing affordability issue within health care and health insurance.

Workers at small firms are hit especially hard with high annual deductibles, greater premium contributions, and increased issues with access. This is especially true for lower-wage workers who may find premiums unaffordable.

Thankfully, recent years have seen a reprieve from the rapid increases throughout the 2000s and 2010s. But the rate of increase has just slowed, not reversed, and workers and employers are responsible for a large cost due to commercial health insurance.

While many small firms are limited to fully insured market options, mid-sized firms with 50 to 500 employees have alternative plan funding options that can open them up to meaningful cost savings opportunities.

Employers continue to shift towards self-funding or level-funding

In the big picture, self-funding is incredibly common. 65 percent of covered employees are in a plan that is self-funded, up from 60% ten years ago.

However, the prevalence of self-funding decreases markedly as we go down market. While 82 percent of covered workers at large firms are in a self-funded plan, just 20 percent of covered workers in small firms are in a?self-funded plan.

While the larger groups are often self-funded, their rates have stayed fairly constant. The reason there has been a net shift towards self-funding is that small firms (under 200 workers) have been meaningfully moving to self-funded plans.

While 20% of small firms had self-funded plans in 2022, that rate was just 15 percent in 2017. That's a 33 percent increase and I think we need to consider why small firms have been shifting to self-funded plans.

While large firms are most often self-funded because they can spread the risk of costly claims over their large number of employees, small firms haven't usually had this ability. But strategies like level-funding and captive stop-loss insurance have given smaller employers new options in their quest to cut their health insurance costs.

If you're wondering how to curb your health insurance cost increases with these funding strategies, let's talk

While these were my takeaways from KFF's 2022 Employer Health Benefits Survey, I'd recommend you browse through it on your own time. Some stats, figures, and graphs are likely to resonate more with you due to your background and goals, and you never know what you might unlock within your own business.

PS Fun Read: Why everything eventually becomes a crab

"The crab shape has evolved so many times that scientists had to come up with a special term for it: carcinization"

Fascinating.