Employers Attempt to Contain Health Care Costs While Balancing Employee Needs

Recent findings from Willis Towers Watson's (WTW) 2023 Best Practices in Healthcare Survey revealed that 69% of U.S. employers are focused on managing health care costs over the next three years. However, mental health remains a priority, with 63% of employers reporting that they're focused on enhancing mental health and well-being programs for the foreseeable future. These numbers indicate that employers are trying to strike a balance between skyrocketing health care costs and employee needs.

"Aligning business priorities, from workforce transformation to healthcare costs to employee wellbeing, requires a constant evolution of benefit programs, culture and employee experience."

  • Regina Ihrke, Senior Director of Health & Benefits

Survey Results

Many organizations are attempting to manage costs and improve affordability by finding health care plan and vendor efficiencies. In fact, 50% of employers are planning or considering implementing programs or using vendors to reduce costs in 2024/2025, and over one-third have already taken action. Additionally, 47% of organizations are planning or considering taking vendor or health plans out to bid to find a lower-cost provider.

At the point of care, employers are controlling costs by planning (or considering offering) a narrow network of higher-quality and/or lower-cost providers (24%), using centers of excellence within health plans (19%), eliminating specialty pharmacy services (16%), and offering plan options that restrict or eliminate out-of-network coverage for non-emergency services (3%) in the next two years.

Employers are also focusing on reducing prescription drug care costs by planning or considering switching to biosimilars (27%), evaluating and addressing specialty drug costs and utilization that are paid through the medical benefit (26%), and having plan coverage exclusions or higher cost sharing for high-cost/low-value medications (14%).

Despite high costs, employers continue to prioritize mental health. More than half of employers have conducted or plan to conduct a mental health parity audit, and 48% have engaged or plan to engage with their employee resource groups to address population-specific mental health issues. Employers are also evaluating mental health networks from a diversity lens to ensure diverse representation and offering mental health days off.

Employer Takeaways

Successfully navigating rising health care costs and employees' mental health needs can improve attraction and retention, boost employee health and well-being and provide employers with a competitive advantage. However, every organization is different. Employers must evaluate their organization's unique needs to find the balance between providing crucial mental health support and implementing cost-saving measures.

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The content of this article is of general interest and is not intended to apply to specific circumstances. It should not be regarded as legal advice and not be relied upon as such. In relation to any particular problem which they may have, readers are advised to seek specific advice.

Marty Thomas

Marty Thomas

Marty has spent most of the last 20 years developing software in the marketing space and creating pathways for software systems to talk to each other with high efficiency. He heads our digital marketing efforts as well as oversees any technology implementations for our clients. As a partner, Marty is also responsible for internal systems in which help our team communicates with each other and our clients.