How Employers Are Responding to Rising Health Care Costs

November 17, 2023by Alex Strautman

Employers are still struggling with attracting and keeping employees. It’s a real challenge that’s not going away any time soon. According to a column by the U.S. Chamber of Commerce in November 2023, “Right now, there are too many jobs without people to fill them. As a result, businesses can’t grow, compete, and thrive.”

As we’ve mentioned in a prior blog, when people are searching for a job, they tend to consider a variety of factors.:

  • An increase in income and/or benefits
  • Greater work-life balance, flexibility, and better personal wellbeing
  • Purposeful work
  • Wellness programs and benefits

Now that you’ve got a sense of what employees are after, how does your employee benefits program stack up?

Here’s a glimpse into how employers are tackling the rising costs of benefits. The trick is to strike a balance between managing expenses and providing attractive benefits that can attract and keep talented workers.

Considering/Making Program Changes

A study by Willis Towers Watson (WTW) found nearly seven in 10 U.S. employers (69%) are seeking alternatives to help them manage costs. Some employers are implementing or expanding wellness programs. Others are considering dropping a PPO in favor of an HMO or EPO or changing health plans.

Twenty-four percent of employers in the WTW survey are planning or considering a narrow network of providers in the next two years.

Prescription Drug and Care Changes

Employers are also considering changes to their prescription drugs and other benefits. The WTW survey found 16% are expecting employees to move to biosimilar drugs when they become available in 2025. Another 27% are planning or considering such a move in the next few years.

The U.S. Food & Drug Administration (FDA) says biosimilars are safe and effective treatments for many illnesses. Those include psoriasis, inflammatory bowel diseases like Crohn’s disease and colitis, arthritis, kidney conditions, diabetes, and cancer. Biosimilars increase patient access to lifesaving medications at lower costs. More information is available on the FDA website.

KFF Health News reported in October that some smaller employers are setting up their own primary care clinics to care for employees. Previously that approach has been reserved for large employers. The Kaiser Family Foundation survey of workplace benefits found about one-fifth of businesses offer on-site or near-site clinics. For employers with 1,000 or more workers, the adoption rate is higher – with 30% or more offering such benefits.

Switching to an Exchange

California employers are opting to move to a health insurance exchange as an alternative.

The CaliforniaChoice private health insurance exchange has been serving California small businesses since 1996. Today, employers across the state with up to 100 employees can enroll in CaliforniaChoice and take advantage of:

  • Eight health plans in one program. Participating carriers include Anthem Blue Cross, Cigna + Oscar, Health Net, Kaiser Permanente, Sharp Health Plan, Sutter Health Plus, UnitedHealthcare, and Western Health Advantage.
  • Dozens of coverage options. CaliforniaChoice offers full and narrow networks and HMO, PPO, and EPO plans in all four Affordable Care Act (ACA) metal tiers. You can offer employees a single tier, multiple tiers, or all tiers (Bronze, Silver, Gold, and Platinum).
  • Cost control using Defined Contribution. You choose how much you want to contribute to employees’ coverage. Select a Fixed Percentage (50% to 100%) of a specific plan and/or benefit or a Fixed Dollar Amount for each employee.
  • Greater access to doctors, specialists, and hospitals.
  • Dental, Vision, Chiropractic, and Life These include HMO and PPO Dental, Vision service discounts, chiro exams and adjustments, and Life (including a Living Benefits provision).
  • Valuable no-cost benefits for your business and your employees through the Business Solutions Suite and Member Value Suite.
  • Consolidated billing for all employees’ coverage on one monthly bill.
  • Smart decision technology. Our tech gives members the ability to easily compare plans, enroll online (and reduce processing time), and easily find out which plans offer access to preferred doctors, specialists, and hospitals or needed medications.

Plus, at renewal, employees have the option to change health plans and/or benefits without leaving CaliforniaChoice. You can also adjust your contribution – up or down – and lock in your costs for another year.

Talk With Your Broker

In considering changes you might want to make in response to increasing health insurance costs, a good place to start is to contact your health insurance broker. A broker can help you compare plans and employee coverage options and provide a customized quote for your business. Your broker can also explain the advantages offered by moving to a health insurance exchange program like CaliforniaChoice.

If you don’t currently have a broker, you can easily search for one online.

Shopping for group health insurance?

This guide compiles a list of common questions you may have before you start offering health insurance coverage.