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What is Employer Activism, How Will Payers React to it in 2020?
Employer activism is a trend that has gained traction in the past few years and could shape payers’ 2020 strategies, but it has yet to be well-defined.
Born under the pressure of skyrocketing healthcare spending, employer activism enables employers to take control of their companies’ healthcare spending, in a way that could both strengthen and complicate their relationships with payers.
Understanding this emerging trend could prove influential in payers’ strategies moving into 2020.
“Employer activists are employers who are engaging with physicians either directly or through their health plan administrator to improve health care delivery and affordability through accountable care organizations (ACOs), centers of excellence, high-performance networks, or similar arrangements,” Steve Wojcik, vice president of public policy at the National Business Group on Health, told HealthPayerIntelligence.com in an email interview.
To understand what employers are looking for and how to leverage employer activism to strengthen the payer-employer relationship, it is critical to understand the history of employer activism as a concept.
Midway through 2019, PricewaterhouseCoopers’s (PwC’s) medical cost trend report projected a medical cost trend of six percent increase for 2020. While this is a drastic decrease from the medical cost trends a little over a decade ago (11.9 percent), the trend is a slight uptick from 2018 and 2019 (both 5.7 percent) and does not factor in inflation.
Employers were hard hit by these rising costs.
A Kaiser Family Foundation report found that premiums for employer sponsored health plans in 2019 now exceed $20,000. Employers are currently responsible for on average $14,000 of that for each worker.
And this has been a trend for decades. In 1999, employers’ average contributions totaled at $4,200 of the overall $5,800 average premium cost. By 2013, when industry experts were starting to use the term “employer activism,” employers contributed $11,800 to the average $16,400 premium.
One seemingly logical response was to eschew payers altogether. A Deloitte article from 2013 explored the trends in employer-sponsored healthcare coverage and health insurance as a whole.
“Employer activism is a forcing factor in the health insurance industry: Ten percent of employers, mostly smaller companies and organizations, dropped coverage altogether in the last decade,” the article explained.
This resulted in employers shifting a lot of the costs to their employees using high deductible health plans and, for those that continued with a health plan, greater cost-sharing. Between 2013 and 2017 the employee contribution scaled $1,100.
But employers have maxed out on their ability to shift costs to their employees, the PwC medical cost trend report found.
High deductible health plans fell out of favor as employees demanded more flexibility and personalization and employees balked at employers’ efforts to shift costs, as cost-sharing and deductibles surpassed wage growth. Employers are increasingly under the impression that they cannot, in good conscience, continue to place the financial burden of healthcare on their workforce.
Thus, around 2017, employer activists started pursuing a new goal in earnest: lower overall healthcare costs.
The new approach, still developing today, encompasses contracting with high quality, low-cost providers, and engaging in preventive medicine. Employers are also promoting employer-sponsored health and wellness programs, virtual care, telehealth solutions, work-site care, and employee education about how to decrease healthcare costs.
Employer Activism as an Opportunity
Wojcik sees employer activism as an opportunity for payers and employers to continue working together toward a common goal.
“Very frequently payers are partners with employers in this. Both have an interest in rewarding providers who are performing at a higher level on quality, cost, and patient experience,” Wojcik said. “Health plans work with and welcome employer support for engagement with providers. A united front and working together makes a more compelling case to the need for delivery transformation.”
To Ben Isgur, Health Research Institute leader for PricewaterhouseCoopers (PwC) in the US, employer activism may have implications for the way payers strategize in 2020.
“If you're a payer you kind of step back and say, ‘well, what does that mean for my identity?’” Isgur told HealthPayerIntelligence.com.
According to a recent PwC report on the top health industry trends of 2019, as payers step back to reevaluate how they are portraying themselves to employers, they may choose to invest in one of four major identities. They may emphasize and accelerate their leadership in product and innovation, population health and outcomes, member experience and consumer advocacy, or value.
These are identities that the healthcare industry as a whole will be pursuing in the new year, but they come to the forefront as payers encounter employer activism.
Isgur pointed out that some employers are even partnering with third party vendors to be a “firewall” between the employee and the payer organization.
As a result, payers may choose to pursue an image of leadership in consumer experience. They may find ways to help employees navigate their healthcare more seamlessly, so that no third-party is necessary.
“Employers become employer activists as a way to try to take on some of the tsunami of high prices,” Isgur explained. “They're really just more interested in getting active about the costs and the outcomes of their employee’s health.”
A Successful Payer-Employer Activist Relationship
Successful payers in 2020 will respond by recognizing employers’ needs and demonstrating how the payer can meet them better than a third-party vendor.
Having a strong provider network is key to developing a strong relationship with employer activists. As employers contract individually with physicians, they are looking for providers who deliver high quality at a low cost. Payers should continue to work to facilitate those relationships and build the networks employers seek.
Additionally, employers are looking for healthcare that is low cost and convenient for both them and their employees.
For this reason, there has been a major push for work site points of care in order to minimize the amount of time that employees have to be away from work to take care of their health and to ensure that they have access to a low-cost, high quality provider.
Virtual wellness programs also help with convenience and cost.
Blue Cross Blue Shield of Michigan (BCBSM) has been using their Virtual Well-Being Program to meet members’ and employers’ convenience and cost needs.
“The program uses a virtual format, allowing us to be scalable and deliberate,” Cindy Bjorkquist, the payer’s director of Health and Well-Being explained to listeners on an Xtelligent Healthcare Media webcast earlier this year. “It has separate sessions for members and employers, on the same topic, and delivers content using live webinar capabilities, PowerPoint, and graphics. The intent was always to host the sessions live with audio and video, as opposed to just a podcast or audio webinar, which most people are doing.”
The payer also has an on-site program for employers to promote positive mental health. BCBSM coordinators placed within the company help foster an environment of wellness, hosting classes, screenings, and Blue Cross programs.
Programs such as BCBSM’s will bolster employer activism while strengthening the employer-payer relationship.
As it continues to evolve, employer activism may continue to shape, strengthen, and potentially complicate the relationship payers and employers share.
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