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Employers Are Relying on Data Analytics to Tackle Increasing Benefits Spend

Today’s leaders are balancing a growing list of short and long-term priorities, including controlling operating costs, sustaining employee productivity and mitigating health risks and cost drivers, all while facing an uncertain future.

The high cost of health care services in today’s marketplace means it is essential for health care consumers to be aware of their benefits offerings and understand how to maximize their programs to reduce overall health care costs. On average, employers can expect health care and benefits costs to increase by about 6% per year. Some employers see double-digit increases, far surpassing the rate at which wage and general inflation are growing. To combat this trend across five generations of employees with a range of health care needs, employers must shift away from relying on “gut instinct” and anecdotal suggestions to strategies supported by data and analytical insights.

And for those entering retirement age, particularly the baby boomer generation, physical health and its potential costs are a top concern for employees and employers alike. This uneasiness has compelled many consumers to work well beyond the typical retirement age, increasing health care costs for employers. On average, health care costs for an employee aged 65 are over two times the cost for those of a 40-year-old employee. Additionally, most senior workers typically have higher salaries which only compounds the problem facing employers.

By offering financial management education alongside physical health education, leaders can help their team balance the decisions and costs associated with healthy living and health care. However, education alone is not enough. When it comes to physical and financial health, employers and plan sponsors are looking for actionable ways to measure and improve employee engagement. Something as simple as reviewing plan offerings through a lens of the various groups on the plan can give insight into the type of plans that would benefit the employees. For example, depending on the specific situation, an employer may want to consider offering a health savings account (HSA)-eligible plan. This type of plan can provide individuals seeking a retirement savings vehicle a post-retirement health care funding, enabling them to retire with dignity at a preferred age.

Putting it Into Practice:

Taking a closer look at an employee population’s demographics, age groups and other distinctions can help identify valued benefits for each person which, will, in turn, encourage and improve engagement. However, that baseline understanding is typically not enough to control costs. One of the best ways to uncover cost drivers is by utilizing a data analytics tool that receives claims information. Typically, this information comes in raw form from the insurance carriers, and most employers don't have the capacity or time to sift through the data. Here’s where the data analytics tool becomes powerful. It saves time by interpreting the data into meaningful insights, ranks the highest medical and prescription drug cost drivers, identifies gaps in care and so much more.

During a mid-year review with a customer, OneDigital was able to identify from their data analytics the areas that were driving costs. The data also revealed lifestyle conditions within the population and led to an implementation of a multi-faceted financial health education series which looked at a comparison of 401k versus an HSA.

  • Low Preventive Care Utilization: While it may seem foundational, it is critical that every individual gets a regular check-up. However, finding the time and conquering any health fears tends to hold people back. We provided the employer with materials to promote Preventive Care and the idea to float a paid wellness day for employees to get their exams. If even one person can catch cancer early, this could save the employer hundreds of thousands in treatment costs, not to mention the invaluable impact on that person’s life.
  • Target Lifestyle Conditions: Stress, anxiety and depression were the top conditions, followed by Attention-Deficit/Hyperactivity Disorder and lower back pain. The OneDigital team was able to target these conditions by implementing a stand-alone Employee Resource Program (EAP) and mental health solution while offering ergonomic evaluations.
  • Gaps in Care: Communicate to employees why the insurance carrier may be calling or texting them. After socializing this with employees, the company saw a marked uptick in engagement with the carrier looking to help manage their care.
  • Understand what services are being utilized out-of-network and conduct a disruption analysis to implement an in-network only plan. This approach has the ability to yield 10-20% savings.

OneDigital customers receive transparent and actionable insights that highlight cost drivers of the benefits plan. Working in tandem with their OneDigital team, customers use these insights to develop programs that can directly improve employee engagement and overall workforce health to reduce costs over time.

One such customer is a large health care provider in New England that came to us mid-year with a complaint regarding their dental benefit offering. The customer was offering a triple option plan and the HR team was spending too much time explaining the small differences between each plan to employees. OneDigital conducted a full analysis regarding both plan designs and carrier partners. As part of this mid-year data evaluation, we wanted to be sure to recommend the carrier with the most competitive network and reviewed raw claims files and asking each carrier to reprice assuming their negotiated discounts. This process revealed a better network alternative which allowed us to negotiate the network further with the incumbent carrier. In summary, this midyear analysis will save about 6% for our client’s dental plan and offer employees more competitive options for care.

In today’s rapidly changing world, making data-driven health care decisions is a necessity. Analyzing health care data to help control spend, make plan decisions and target population health management seems like a no-brainer. Unfortunately, most leaders and plan managers lack the bandwidth to implement and effectively derive meaningful insights from large data sets while trying to manage conflicting priorities and ongoing COVID-19 challenges. The mid-year and annual renewal are just the tip of the iceberg and employers looking to control health care costs must effectively manage claims throughout the entire plan year. Combined with benchmarking and predictive modeling, claims and utilization data can tell a holistic story about the future of health plan spend.

Imagine if business leaders had this data at their fingertips for a holistic view of health benefits by combining demographic, enrollment and claims data into a single source. It’s imperative for employers to understand their organization’s funding strategy, health care costs and the variables driving claims to make sure they are offering benefits at a cost that provides the best value and meets their short- and long-term needs.

Understanding the right blend of high-performing health benefits, financial benefits and engagement strategies needed can manifest better business results, nurture a more positive workforce, optimize productivity and enhance culture. Learn more about How Health Care Costs Are Contributing to Financial Issues Among Employees.