"Healthcare is the primary focus of cost-control efforts because it's the majority of an employer's benefits spend," said James W. Durkin, Jr., President, Gallagher Benefit Services, Inc. "Employers should be deliberate about the changes they make to preserve the benefits most coveted by existing employees. Becoming a destination employer requires an open mindset about new and emerging options for curtailing healthcare costs. This approach enables companies to redeploy those funds into other employee-centric benefits that are a differentiator in the ongoing war for talent."
Employers Experimenting with Care Delivery and Funding
Resolved to maximize the value of their human capital investments in the face of intensified cost pressure and ongoing competition for talent, more employers are moving toward combining traditional healthcare options with newer, more innovative approaches. Several newer approaches are poised for significant growth by 2018.
- Telemedicine, now used by 24 percent of employers to provide employees with quick access to affordable care, is predicted to reach 42 percent.
- Narrow network healthcare plans that limit the number of providers, preferably based on quality of care and cost-effective outcomes, show a growth trend from 18 percent to 27 percent.
- Consumer-directed health plan survey findings forecast a rise in adoption from 36 to 51 percent.
- Self-insuring, another increasingly popular method of reducing costs, is expected to grow from 28 to 38 percent.
Employers are also exploring less common options to rein in costs. Some use defined contribution arrangements to give employees a set amount of funds to buy their own insurance – and access to a private exchange. Although fewer than 5 percent of employers have adopted these arrangements, that figure is expected to triple by 2018.
Many Employers Would Likely Benefit from Improved Strategic Planning
Gallagher's recent best-in-class analysis found that employers that excel at healthcare cost management take a comprehensive, data-driven and multi-year approach to compensation and benefits planning. According to survey findings, however, just 8 percent of employers use a multi-year planning process with multiple data inputs while three-quarters (76 percent) plan their benefits year-to-year, putting them in a reactive position and less able to manage costs.
Gallagher Offers Employers Insights and Strategic Advice
"It's important for organizations to recognize that the increasing global competition for talent has both top-line and bottom-line implications. A wholly integrated human capital strategy can provide the solutions, structure and reliability that employers need to attract, engage and retain talent, manage rising healthcare costs and other expenses, and strengthen their market position," Durkin said.
ABOUT THE BENEFITS STRATEGY & BENCHMARKING SURVEY
Gallagher Benefit Services, Inc., the employee benefits consulting and brokerage operation of Arthur J. Gallagher & Co., developed the Benefits Strategy & Benchmarking Survey to provide employers with insights into how their peers are addressing benefit and human capital challenges. The 2016 survey, conducted from January to March of this year, aggregates responses from 3,107 organizations across the U.S. Additional survey results can be found at www.ajg.com/NBS2016.
ABOUT ARTHUR J. GALLAGHER & CO.
Arthur J. Gallagher & Co. (NYSE: AJG), an international insurance brokerage and risk management services firm, is headquartered in Itasca, Illinois, has operations in 33 countries and offers client-service capabilities in more than 150 countries around the world through a network of correspondent brokers and consultants.
Eric White, Weber Shandwick
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SOURCE Arthur J. Gallagher & Co.