November 28, 2023
Each year, Business Group on Health compiles “trends to watch” for the coming year. Each trend relates to a part of employer health and well-being strategy, which may be impacted by broader factors. These factors can include the economy, lingering impacts of the COVID-19 pandemic, regulation and compliance, technology and innovation, global events, the political landscape and workforce trends.
Health care costs are climbing – bringing heightened vigilance by employers.
While employers have long been
focused on health care costs, there is a greater sense of urgency heading into 2024. A
forecasted higher-than-historical trend, suggesting that, despite investments in
technology and clinical innovation, as well as efforts to manage utilization and waste,
the already high U.S. health care costs show little sign of abating. There are many
factors fueling this, including general inflation, labor pressures on health care
systems, growing concern over provider shortages, burgeoning mental health needs, missed
and deferred preventive screenings leading to more late-stage cancer diagnoses and
worsening of chronic conditions.
To further complicate these dynamics, employees’ health care experiences are impacted by fragmentation and growing concerns about affordability of medications and medical services. Furthermore, the growing number of effective but prohibitively expensive cell and gene therapies, along with projected high demand for and widespread use of GLP-1s for managing obesity, are emerging as material cost drivers for self-funded employers today, with the use of these treatments increasing in the coming years. To address these realities, employers will strive to strike a balance between near term cost-management efforts and the continued effort to drive substantive changes within the system overall to promote value in health care and quality of services for their members. Two-thirds of employers indicate that their health and well-being strategy is an integral part of their workforce strategy, underscoring the importance of this effort.
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Access to mental health and substance use disorder services remain a priority, with a growing focus on emerging areas of concern.
Nearly 8 out of 10 employers
report experiencing an increase in utilization of mental health services in the wake of
the height of the pandemic. A 2023
Gallup Poll found that
depression rates are at an all-time high, and
employers are working to keep up with the need for patient support and care by expanding
offerings within their plans and programs. In fact, 70% of employers say that mental
health access is a top priority for 2024. To improve access, employers will focus on
using virtual mental health providers, among other measures. Furthermore, about a third
of employers will offer on-site mental health services at a reduced cost. To ensure that
employees’ needs are being met, there will also be a growing movement to hold
vendors and partners accountable for expanding access.
While expanding access to services remains a priority, employers are growing increasingly concerned regarding several subcategories of burgeoning need, including youth and adolescent mental health as well as suicide prevention. Vendors will be expected to collaborate with one another to create a more seamless and integrated approach that addresses the myriad challenges related to mental health access, quality and range of services needed.
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Employers double down on cancer and other serious or chronic conditions.
While cancer is already the number
one cost driver for employers, 41% of employers also report that they anticipate a
higher prevalence of late-stage cancers due to delayed screenings. This has prompted
employers to act with a sense of urgency to prioritize prevention, introduce enhanced
screening options and step up their efforts in cancer patient navigation.
Employers’ concern certainly doesn’t pertain to only cancer: 41% of
employers also expect to see higher chronic condition management needs in the future.
For conditions like diabetes, cardiac health and musculoskeletal conditions, there could
be more occurrences of these conditions and a higher level of severity. This is
exacerbated by physician shortages and burnout, compounding concerns about foundational
primary care and preventive services.
In 2024, it is anticipated that employers will go “back to basics” on physical health – with a renewed emphasis on prevention and primary care. These are not new strategies for large employers, but signal the urgency felt by companies to avoid deferred care and the associated late-stage conditions and costs. In addition, advances in medical treatment may mean that employees will receive more personalized, precise care. Biomarker screenings, pre-treatment genetic testing and cell/gene therapies represent opportunity if deployed appropriately and effectively. Employers may increasingly look to these alternatives as a way to improve experience and outcomes.
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Employers express growing alarm over the sustainability of and lack of transparency into drug pricing.
Employers have become increasingly
worried about rising drug costs over the past decade. One hundred percent of employers
surveyed indicated some level of concern related to prescription drug trend. With
pharmacy trend outpacing overall health care trend, employers have strong reasons to be
focused on prescription drugs. The situation is especially acute for specialty
medications and is further fueled by recent innovations in the pharmacy space. While
curative treatments (like some cell/gene therapies) are heralded as exemplary advances
of our health care system, they come at a steep cost to employers and patients alike. In
addition, specific drugs like GLP-1s indicated for type 2 diabetes and increasingly for
obesity have potential for widespread population use.
While most employers do not dispute the benefit of these drugs for the patient populations for whom they are appropriate, their consternation relates to the cost of these therapies for both the plan and patients, as well as the sheer number of individuals who meet the eligibility criteria and will need to continue treatment for a long period of time. Without necessary transformation within the pharmaceutical market, employer plans – and the broader health care system – may crumble under the weight of unsustainable drug pricing. Employers are increasingly demanding greater prescription drug pricing transparency from all parties. Further, a growing number of employers will explore rebate-free pharmacy management arrangements, putting pressure on the system to validate the economics of both existing and emerging models.
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Employers place heightened expectations on their partners to deliver.
Due in large part to persistent concerns
about cost, quality and outcomes, many employers will be more discerning when it comes to
partnerships and place increasing expectations and accountability on partners to deliver. For an
array of reasons—some valid, others not—vendors and partners have struggled to deliver
on the promise and potential of their solutions and capabilities. Employers will also demand
greater transparency, reporting and measurement of impact from their partners. In 2024, many
employers will revisit contracts with existing partners, and potentially consider consolidation
as well as changes to partner relationships. Other driving forces are the need to reduce
fragmentation, seek stronger integration and streamline partnerships to improve the employee
experience and ultimately, patient outcomes.
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Global employers implement strategies focused on greater consistency across countries while adapting to local regulations and cultural appropriateness.
In 2024, it is anticipated that more global
employers will make it a priority to create consistency of offerings to their employees across
countries. Employers will seek to do this in an effort to advance key health and well-being priorities,
including access to primary care, EAP/emotional well-being, and coverage for family-forming services and
programs in support of LGBTQ+ populations. Employers increasingly look to leading edge mechanisms such
as captive insurance arrangements to create a platform to deliver consistent programs across country
borders.
Most employers embark on this strategy by first completing a thorough inventory of country-by-country programs, looking for gaps or shortfalls between existing offerings (including government-mandated programs) and the desired consistent level. This approach will likely play out over multiple years for most employers, as they will need to balance the strategic objective of consistency against a set of minimum standards and governance, along with assessing the added cost of closing existing gaps. As employers embark on enhancing and expanding their global health and well-being strategies, they do so as national health systems around the world face economic challenges that threaten long-term viability. As new treatments and coverage options emerge for more medical conditions, employers will need to be mindful of potential shifts in responsibility from the public sector to the private sector.
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The role of well-being continues to evolve.
Over the past 8 years, employers
have made tremendous progress in addressing all aspects of well-being. In addition to
physical health, many employers now incorporate mental health, financial well-being,
social health, community and job satisfaction in their well-being strategies. Along with
this wider scope, there has been a steady increase in the number of employers that view
well-being as a fundamental part of their workforce strategy. This trend underscores the
link between overall well-being and the ability for employees to perform at their best.
As employers look ahead, they will need to balance their continued commitment to well-being against mounting cost pressures, potentially by investing in the highest priority and most highly valued initiatives. Furthermore, they will aim to hold partners accountable for outcomes and engagement. Increasingly, employers are considering well-being strategies through a regional or global lens as well, adopting globally consistent guiding principles with relevant local market program modifications.
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The U.S. presidential election is impending, and it is uncertain how health care will be impacted.
The run up to the U.S. election in
November 2024 will undoubtedly have implications for many issues relevant to employers
in the areas of employee health and well-being. As American voters select a president
and decide on control of both chambers of Congress, it is anticipated that health and
well-being will be part of the dialogue. Whether overtly debated or indirectly impacted,
issues ranging from the economy, taxation of employer benefit plans, prescription drug
pricing, affordability, provider consolidation, reproductive rights, transgender care,
mental health and health equity, among others will most certainly be keen areas of
interest for employers this upcoming election cycle.
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As ERISA turns 50, preemption is even more important for self-insured employers.
Since 1974, ERISA and its
preemption provisions have played a significant role in creating an efficient and
consistent structure for employer plan sponsors. By avoiding state-by-state design and
administration limits and variability, preemption enables employers to curate a
consistent and equitable benefits package that can be offered to employees and their
families regardless of work location. However, recent state-based legal battles have
challenged ERISA and its preemption status. Nearly all employers–93%–have
indicated a sense of urgency in preserving ERISA preemption, not only for consistency
and administrative reasons, but also to deliver on health equity efforts in a
comprehensive and nationally consistent manner.
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