How Employers’ Investment in Health Benefits Has Transformed Over Time

Prior to the Covid-19 pandemic, employers looked upon their insurance carrier as their be-all and end-all when it came to employee benefits. Now, however, the focus has shifted to providing employees with a diverse set of solutions for specific conditions, with an eye toward affordability, cost reductions and improved outcomes.

“If you go back pre-Covid, even further back than that, a lot of that investment was with a single major carrier,” said Drew Hodgson, healthcare delivery and national practice leader at Willis Towers Watson. “Like UnitedHealthcare, Aetna, whoever it may be, was being the navigator, was being the center of excellence, was doing all of it. It was kind of a one-stop shop for all of it. I think employers are now realizing that specialty vendors can potentially come in to supplement what the carriers are doing.”

What kind of point solutions are they turning their attention to? There’s a long list, several experts said. About 70% of large employers are planning benefit advancements for 2023, with 84% of employers saying “enhancing benefits to improve attraction and retention” is a priority, according to a recent Mercer survey

But one benefit that has especially risen in popularity is behavioral health. About 88% of employers have acted to boost their mental health service capability in the last year, according to a recent Willis Towers Watson survey. Another 67% said they are looking to make mental health and emotional wellbeing programs a top health priority in the next three years. Additionally, the Mercer survey found that more than a third of large employers are training managers on mental health, 34% added a behavioral health navigation service and 74% said improving access to behavioral health will be a priority in the next few years. While experts declined to name specific companies in the space, solutions for employers that address mental health and wellbeing include Headspace Health and Calm

“From a mental health and substance abuse perspective, what we’ve seen over the past few years is increases in anxiety and depression and adjustment disorder, which can sometimes coincide with stress,” said Christine Schulze, principal behavioral health consultant at Mercer. “We’ve seen employees rethinking their relationship with work … To attract and maintain talent, employers have had to respond to this.”

Reproductive health is also becoming more important for employers, with 37% of employers offering one or more solution in this area, according to Mercer. Additionally, 19% are offering a fertility benefit (meaning financial support for fertility treatment) and 15% are offering a concierge fertility service (meaning access to a dedicated specialist who works with the member and a care team). Health vendors that offer family planning benefits to employers include Carrot Fertility and Maven Clinic, though these were not named by the experts. 

Another major priority for employers is affordability. High deductible consumer-directed health plans are losing traction, with only 9% of large employers offering these plans compared to 22% in 2018, according to the same Mercer survey. 

“There’s been a pretty big push to help folks with affordability around benefits,” said Alexander Domaszewicz, senior principal of total health management at Mercer. “So how can we help lower-paid folks afford the care that they need? How can we give them flexibility?”

But mental health, affordability and family planning are only the tip of the iceberg when it comes to the laundry list of items employers are investing in. Employers are also offering solutions for health equity like Included Health, virtual health like MDLive, caregiving support like Papa and more. 

Even as employers are investing in specific solutions, all of this is undoubtedly leading to point solution fatigue. That’s where navigation vendors like Accolade and Quantum Health come in, Hodgson said. While these types of companies will have a difficult time proving direct ROI to employers, they still hold a lot of value. 

“There is an awful lot of vendor fatigue right now,” Hodgson said. “When there are so many point solutions, so much investment in the market, employers’ heads are starting to spin a bit about all the different options available in the market. That’s my point where some of the navigation vendors can come into play as a single point of contact to get them the care they need.”

But as employers have added these benefits over time, a tougher economic environment will bring more scrutiny on vendors.

Employers are starting to look at the vendors they’ve added and analyze which ones are driving the best results and which ones may be overlapping, said Ellen Kelsay, president and CEO of Business Group on Health. 

“Employers are also stepping back to say, ‘Are all of those solutions that I’ve implemented over the past number of years delivering the outcomes that are expected? Now that we are in a quasi post-pandemic environment, do I have duplication and overlap in some of my services? Do we need to streamline for efficiency, for cost effectiveness, for quality outcomes, for patient experience?’” Kelsay said. “They’re taking a much more rational approach to their partnerships and are expecting their partners to deliver a more integrated patient experience, more integrated data experience to them as the purchaser of these services.”

Some employers are also starting to offer lifestyle spending accounts, which provides money for employees to put toward certain benefits of their choosing, Domaszewicz said. This could possibly be used for some digital health solutions, like those that address stress and mindfulness. It also allows the employer to provide benefits without contracting with another point solution, he added.

“There is a desire to not necessarily have to pick and choose all these point solutions,” Domaszewicz stated. “There’s always going to be something new, great and emerging that people are going to raise their hand and say, ‘Hey, we want this.’ … Instead of having to manage as big of an ecosystem, there is some value in providing some financial support and saying, ‘You choose what’s important to you and here’s the financial wherewithal to do that. You choose what’s right for you at this particular time.’ I think we’ll probably see more along those lines of trying to be more flexible and provide choice in some way in the future.

Photo: Feodora Chiosea, Getty Images