Total health benefit cost rose 3.4% on average in 2020, reaching $13,674 per employee among all U.S. employer health plan sponsors with 50 or more employees, according to the annual Mercer National Survey of Employer-Sponsored Health Plans 2020.
Large employers (those with 500 or more employees) reported a cost increase of just 1.9%, their lowest increase since 1997, as plan members avoided health care facilities due to the pandemic.
Large employers typically self-fund their plans, which means they may see costs fall as utilization falls, unlike fully insured employers that pay a fixed premium. Survey results suggest that many large employers plan to use money saved in 2020 to invest in programs to support and engage employees in 2021.
“The need to minimize exposure to the virus and ease the strain on overloaded health facilities caused many people to forgo care this past year, which translated to slower cost growth in 2020. Heading into 2021, that’s allowed employers to avoid cost management tactics like shifting cost to employees,” said Tracy Watts, a senior consultant at Mercer. “Instead, we’re seeing many focus on supporting employees with additional resources to help keep them engaged, productive and healthy during these tough times.”
Low utilization of behavioral health care
A Mercer claims analysis found that fewer employees are receiving behavioral health treatment than last year—a serious concern given that the pandemic has intensified issues with work-life balance, isolation, sleep disorders, alcohol consumption and financial stress, and has worsened the opioid crisis.
Mercer’s database of claims information (based on over one million members) shows that from March to May of 2020, the number of individuals with newly diagnosed behavioral health problems was down 25% from the same timeframe last year, despite the likely greater need.
This is an increasingly urgent concern for employers. In the survey, out of 11 possible priorities for employee well-being, behavioral health was ranked first by a wide margin, with 75% of large employers calling it a priority. More than one-fourth (29%) have already provided managers with formal training to support their employees’ emotional and behavioral health needs, and another 24% are planning to. About one-fifth (19%) say they plan to add programs or services to expand access to behavioral health services next year.
Many working parents face additional sources of stress due to disrupted school schedules and lack of childcare. While 40% of all large employers are permitting flexible schedules to allow parents to care for children during daytime working hours, relatively few offer child care benefits. Even among very large employers (5,000 or more employees), just 17% provide a financial subsidy for in-home childcare, and just 14% provide a back-up child care benefit.
Substituting telemedicine for in-person visits
Utilization of virtual care and telemedicine services were low prior to the pandemic; in 2019, large employers reported that just 9% of eligible employees or family members used their telemedicine service at least once. In 2020, however, the utilization rate jumped to 14% within the first six months—by the end of the year it will likely climb still higher. To encourage employees to use telemedicine services, many employers waived copays: where 82% charged a copay before the pandemic, just 48% did so this summer.
Employers were largely pleased with the performance of their telemedicine provider in terms of customer service and wait time during the pandemic: 74% were very satisfied or satisfied and only 2% were dissatisfied, while 24% didn’t have enough feedback to say. Given the wider adoption of telemedicine during the pandemic, it’s not surprising that 80% say it will play a larger role in their programs going forward.
“As employers begin to plan for a larger role for virtual care in their programs, they’ll need to think about how to incentivize employees to use the right modality for the service they need—AI, telemedicine, a virtual visit with their own provider, or an in-person visit,” says Ms. Watts. “Getting the pricing right for the different levels of care—or even moving to a bundled payment model—will determine whether virtual care ultimately helps control healthcare cost as well as add convenience.”
Employers seek new ways to engage employees
More than half (56%) of large employers say they are “extremely” or “very focused” on the employee experience, and, in 2020, 40% report that their organization’s mission statement explicitly supports creating a healthy workplace culture—up from 23% three years ago in 2017. But employers now face the challenge of engaging both employees at their worksites and those working remotely. Surveyed in the summer, only 57% of large employers expected that all or most of their employees would be back at their worksites by this January; given the resurgence, these timelines might be further delayed.
More than a third of all large employers offer a health navigator service, either a telephonic service (29%) or an AI-powered digital service (6%), to help employees find the right provider and offer assistance during episodes of care, and another 16% are considering it. Nearly one-fourth (23%) of those with 5,000 or more employees will add new targeted health solutions—typically with a digital component—in 2021 to help employees better manage health conditions on their own or help them improve their health habits.
Almost a quarter of all large employers (23%) say they will add or expand their voluntary benefit offerings in 2021. These include supplemental health insurance, such as cancer or critical illness insurance and hospital indemnity plans, but also coverage to protect employees from a variety of unexpected expenses, such as pet insurance.
“Employers understand the value of an engaged workforce. Virtual programs allow employers to reach employees wherever they are. And because employees can select benefits that meet their own particular needs right now, voluntary plans help strengthen the employee’s connection with their employer,” Watts says.
Mercer’s National Survey of Employer-Sponsored Health Plans included 1,812 public and private employers in 2020.
The full report on the Mercer survey, including a separate appendix of tables of responses broken out by employer size, region and industry, will be published in March 2021. For more information, visit www.mercer.com/health-benefit-trends.