Employer Healthcare Priorities: 1) Lower Deductible, 2) Behavioral Health, 3) Expand Virtual Care

This video provides an in-depth exploration of employer healthcare priorities for the 2023 plan year, drawing insights from the Mercer Employer Survey. Dr. Eric Bricker, the speaker, begins by establishing the context: despite widespread public and media focus on high healthcare costs, the vast majority of employers are strategically prioritizing benefit enhancements over cost reduction. This counter-intuitive finding is attributed to the current low unemployment rate (3.6% as of June 2022), which makes employee attraction and retention (A&R) a paramount business challenge for organizations across all sizes.

The presentation then delves into the top three ways employers plan to enhance their healthcare benefits. The primary enhancement is making healthcare more affordable for employees, often by offering lower deductible plans or even copay-only options, signaling a potential shift away from the consumer-directed high-deductible health plans that gained prominence post-2007 financial crisis. Secondly, employers are focusing on behavioral health, predominantly through "enhanced" Employee Assistance Programs (EAPs) and the introduction of self-service technology resources like websites and apps. Lastly, virtual care is being expanded beyond traditional telemedicine to include virtual behavioral health visits and virtual primary care, viewed as a benefit enhancement rather than a cost-cutting measure.

Dr. Bricker emphasizes that these employer priorities stand in stark contrast to popular healthcare finance discussions, which often center on price transparency and Pharmacy Benefit Manager (PBM) controversies. He argues that employers, who collectively pay more for healthcare than any other entity in the U.S., are not strategically prioritizing these cost-containment efforts. This observation leads to a crucial piece of advice for digital health companies, brokers, and consultants: to succeed in the employer-sponsored benefits market, it is essential to "bend with the trend" and align offerings with the current employer focus on affordability, behavioral health, and virtual care enhancements, rather than solely pushing cost-reduction narratives. The video concludes by highlighting the inconsistent nature of employers as a force for change in healthcare, noting that their priorities tend to shift towards cost containment only during economic downturns and high unemployment, making them an unreliable long-term driver of systemic change.

Key Takeaways:

• Employer Priority Shift: For the 2023 plan year, 70% of employers are prioritizing benefit enhancements over lowering healthcare costs, a significant departure from common public discourse on healthcare finance.
• Attraction & Retention (A&R) as a Driver: The primary reason for this strategic shift is the acute need for employee attraction and retention, fueled by a historically low unemployment rate (3.6% as of June 2022).
• Focus on Affordability: The number one way employers are enhancing benefits is by making healthcare more affordable for employees, with 41% offering lower deductible plans or even copay-only options, moving away from the high-deductible health plan trend.
• Enhanced Behavioral Health Access: Employers are addressing behavioral health needs through enhanced Employee Assistance Programs (EAPs) and by adding self-service technology resources (e.g., websites, apps), often as a low-marginal-cost approach to expanding access.
• Expansion of Virtual Care: Virtual care is being expanded beyond traditional urgent-care-focused telemedicine to include virtual behavioral health and virtual primary care, positioned as a benefit enhancement rather than a cost-saving strategy.
• Disregard for Cost-Containment Buzzwords: Despite widespread media attention, employers are not prioritizing price transparency initiatives or addressing PBM controversies as strategic priorities for their 2023 health plans.
• Market Alignment for Digital Health Companies: Digital health companies, brokers, and consultants are advised to align their offerings with current employer priorities (affordability, behavioral health, virtual care enhancements) to gain market traction, rather than solely focusing on healthcare cost reduction.
• Inconsistent Force for Change: Employers are not a consistent force for change in the healthcare system; their priorities fluctuate with economic cycles, shifting to cost containment primarily during recessions when unemployment is high.
• Opportunity for AI/Software Solutions: The emphasis on "self-service technology resources" for behavioral health and the expansion of "virtual care" presents an opportunity for AI and software development firms to create innovative solutions that align with these employer priorities.
• Understanding Client Context: For firms serving the pharmaceutical and life sciences industries, understanding that their client companies (as employers) are focused on employee benefits and retention is crucial, as this impacts overall operational strategy and investment capacity.

Tools/Resources Mentioned:

• Mercer Employer Healthcare Survey (2023 Plan Year)
• Bureau of Labor Statistics (BLS) unemployment data
• KFF (Kaiser Family Foundation) health benefits survey

Key Concepts:

• A&R (Attraction & Retention): The strategic business imperative for employers to attract and keep skilled employees, heavily influencing benefit design.
• Enhanced EAP (Employee Assistance Program): Expanded or improved versions of traditional EAPs, often incorporating new technologies or broader service offerings for mental health and well-being.
• Virtual Care vs. Telemedicine: Virtual care is presented as a broader concept encompassing ongoing virtual relationships (e.g., virtual primary care, virtual behavioral health), distinct from traditional telemedicine which often refers to episodic, urgent virtual visits with no continuity.
• Consumer-Directed Health Plans (CDHPs) / High Deductible Health Plans (HDHPs): Health plans with higher deductibles, often paired with Health Savings Accounts (HSAs), which gained popularity as a cost-containment measure but are now being re-evaluated by employers.
• PBM (Pharmacy Benefit Manager): Companies that manage prescription drug benefits for health plans, often criticized for practices like spread pricing and rebate structures.

Examples/Case Studies:

• Shift from HDHPs: The video notes a historical shift where CDHPs/HDHPs grew from 2% to 33-35% of employee plans since 2007, but employers are now "dialing it back" by offering lower deductible options.
• Recessionary Shifts: Historical examples include the pivot to HDHPs during the Great Financial Crisis (2007-2009) and the rise of Health Maintenance Organizations (HMOs) in the early 1990s, both driven by recessions and a focus on cost containment.