We are living in extraordinary times - characterized by the COVID-19 pandemic, the subsequent global economic crisis and the ongoing conflict in Ukraine. Organizations are not only having to manage the implications of these events in terms of the health and resilience of business operations, but also in the context of the well-being of the people they employ.

 

Employees are increasingly looking to the firms they work for to provide support. Unsurprisingly, health insurance programs have moved sharply up the corporate agenda and there is evidence that firms have increased benefit spend throughout the pandemic.

 

However, our latest Health Trends research, shows that medical trend rates are increasing, which means the costs of providing these health benefits to employees will grow. At the same time, claims are set to rise, and insurance organisations may seek to limit exposures and mitigate losses by introducing tighter practices, adding exclusions and even increasing premiums.

 

Speaking at our Health Trends webinar, Brad Melton, Partner at Mercer Marsh Benefits and Mandy Lau, Senior Director, Global Benefits at Adobe discussed some of the main findings in the report and – critically – the steps that businesses can take to manage costs whilst also protecting the health of employees.

 

1) Medical trends are rising

 

The research, based on responses from 210 insurers across 59 markets, found that medical inflation is set to rebound this year, with rates reaching 9.5% globally.

 

Melton said that organizations should respond by planning, forecasting, and making sure there is clear communication between HR, the board, finance and other areas of the business.

 

He explained: “In addition to looking at your aggregate forecast, it is also important to understand your utilization and the source of your claims.  So, not just understanding what your loss ratios are but also what the drivers of your experience are.  And then reviewing your cost management strategies and how you can make interventions or investments to help that cost curve.” 

 

2) COVID-19 is impacting claims experiences

 

The research showed that in terms of dollar spend and frequency of cases, COVID-19 is the third greatest driver of claims costs. This could have significant implications in terms of how insurers manage pandemic claims in the future. For instance, 34% said they're considering making changes that would exclude more conditions such as treatment related to long COVID.

 

Mental health is another important part of the picture that must not be forgotten. Melton explained: “This is being felt through quarantine, through isolation, guilt, grief, all of those things that people have experienced over the last two plus years.  About a third of insurers are offering virtual counselling, which is really helpful.  However, we continue to see MMB and our clients pushing for broader coverage and making sure that it's a standard part of coverage as opposed to an add-on.”

 

He adds that while many businesses are boosting coverage through Employee Assistance Programs, it’s important to remember that EAPs are not a fix-all solution. He says employers must prioritize regular treatment and to continue to look at coverages, exclusions, and long COVID. Businesses can also better tackle mental health issues through policy, interactions with the workforce, labor relations and reinforcing the culture as well as having total well-being solutions in place.

 

Lau said: “Burn out is a big topic this year and how do we make sure that we address that?  We implemented Adobe company days off as one way to address burn out. Collectively, as a company, we took 11 days paid in 2021 together.  We assess the needs every year.  In 2022, we re-labelled it to be called global well-being days and have decided to give six days this year.”

 

3) We need to focus on managing chronic conditions

 

The research showed that chronic conditions and their causes are an increasing concern for insurers.  In particular, metabolic and cardiovascular, occupational and dietary risks are translating into health conditions which need treatment and therefore lead to higher claims. Prevention and self-care can lead to better outcomes for workers whilst also helping organizations effectively manage costs.

 

Lau advised: “We’re doubling down on preventions and making sure people are accessing preventive care.  We are pleased to see an uptake of our employees going back to their checkups late last year.  Our top condition was MSK (musculoskeletal) and we are doing some work this year to collaborate with the facilities team, ranging from preventions and ergonomics, to management.

 

Melton said: “Treating the causes by giving employees the tools to help manage those conditions and improve the situation, and understanding how your insurers can partner with you on that journey, will not only lead to better health outcomes but also better financial outcomes as you're able to prevent disease.“

 

Melton added that deferred treatment as a result of the pandemic could lead to an influx of severe cancer diagnoses. He said firms should be running communications campaigns to engage employees in their own health, by making them aware of the risks and the solutions that are available to them. Finally, businesses must prioritize self-care and digital health solutions in benefit plans.

 

4) Health equity must be a growing priority

 

Diversity, Equity and Inclusion (DEI) is a growing priority for many organizations and Environmental, Social, and strong corporate Governance (ESG) remain critical business goals. The good news is, our research shows that insurers are waking up to this trend, with many focused on improving diversity in their offerings.

 

For instance, many of the insurers surveyed said they were considering changes including expanding definitions of dependence, targeting preventive care campaigns, and making sure that their medical networks and providers are reflective of the population in terms of their diversity.

 

Melton concluded: “We're going to continue to see this opening up and firms making sure that healthcare has the same inclusivity and that everyone feels like they have access to the care that they need.  What employers should be thinking about in this instance is aligning the goals of your benefit plans into your broader business objectives in terms of ESG and DEI.  You must also consider how to advocate for better collection and sharing of data.

 

“This is obviously a bit of a balance, but you want to make sure, to the greatest extent you can, that you're listening to needs and having the best outcomes across your entire population.“

 

Lau shared how Adobe are tackling this: “The beauty of having a global structure is that we can develop and execute holistic strategies centrally, sharing guiding principles and playbooks that we’ve developed with Mercer teams. But we are also very much out there to listen.  Employees are getting a bigger voice in influencing benefit design. We rely on employee resource groups and other social channels to gather employee sentiments”.

 

 “As benefits professionals, we spend a lot of time on designing, rolling out things and, addressing employees concerns, but we don't take the time to step back and ask - what are our measurements?  Insights are important. Are we just simply measuring engagement and utilizations or can we go deeper than that?  Can we measure behavioral change, how are people connecting or using different medical services based on their demographics?  Are there deeper insights we could gain so we could really be strategic around which programs we keep and which one to sunset? Data analytics will become more important in strategy development.”

 

Watch the webinar to hear more from Adobe, Bank of America and LinkedIn on how they are tackling cost containment while supporting employees through the pandemic.

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