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Press Release

With healthcare cost increases returning to pre-pandemic levels, U.S. employers focus on affordability and wellbeing

Employers project health benefit costs will jump more than 5% in 2022, Willis Towers Watson survey finds

October 6, 2021

Health and Benefits

ARLINGTON VA, October 6, 2021 – U.S. employers are prioritizing healthcare affordability and employee wellbeing over the next two years as health benefit costs are expected to increase by more than 5% and worries over the impact of the pandemic linger. That’s according to a new survey by Willis Towers Watson, a leading global advisory, broking and solutions company (NASDAQ; WLTW).

Employers expect their costs for medical and pharmacy benefit expenses to increase 5.2% in 2022, even after taking cost management initiatives into account. The increase is slightly lower than the 5.5% increase employers projected for 2021 but sharply higher than the actual 2.1% increase in 2020. Last year’s increase was the smallest in decades and is seen as an anomaly as many people deferred non-emergency care and rapidly embraced telemedicine during the pandemic. With 86% of employers prioritizing employee affordability, employers will take different approaches regarding absorbing a portion of the cost increases or reflecting these fully in the employee cost share.

Survey respondents were asked to identify their key priorities over the next two years. Here are their responses:

Survey responses
Key priority over the next two years Percentage
Achieve affordable and sustainable costs for organization 90%
Achieve affordable costs for employees, especially lower wage employees 86%
Enhance employee wellbeing 85%
Identify programs that support diversity, equity and inclusion goals and social determinants of health 78%

“Rising costs and increased utilization fueled by a resurgence in deferred care are driving employers to find new ways to control costs while providing employees with affordable, high-quality care,” said Julie Stone, managing director, Health and Benefits, Willis Towers Watson. “COVID-19 accelerated both provider adoption and employee acceptance of telemedicine and virtual care. Employers see continued use of virtual care as integral to sustaining improvements made in access, quality and cost management. At the same time, employers must now address the Delta variant, encouraging workers to access the care and support they need while grappling with rapidly evolving conditions.”

The survey identified several measures employers are taking to address affordability, benefit designs and network management issues, including:

  • Premium contributions based on pay and grade: Nearly a quarter of employers (22%) currently structure employee contributions based on pay levels or job grades. Another 8% are planning or considering doing so in the next two years.
  • Working spouse surcharges: A quarter of employers (25%) use spousal surcharges when additional employer coverage is available for the working spouse. Another 9% are planning or considering spousal charges in the next two years.
  • Narrow networks: Nearly a third (30%) of employers are planning or considering offering a narrow network of higher-quality and/or lower-cost providers. Currently, two in 10 respondents (21%) offer narrow networks.
  • Centers of excellence: Nearly half of employers (48%) use centers of excellence within their health plans. Another 23% are planning or considering adding centers of excellence within their health plans.
  • Concierge services: About a third (31%) offer access to concierge services with integrated care management programs; 25% are planning or considering doing so.
  • Telebehavioral health: A majority of employers (89%) are offering coverage for telebehavioral health services, and 7% are planning or considering it.
  • Onsite health promotions: More than half of employers (55%) offer onsite/worksite health promotion activities, and 17% are planning or considering it.
  • Medication adherence: Only 13% have plans in place that support medication adherence and improved health outcomes in more vulnerable populations; however, nearly 30% are planning or considering changes.
  • Specialty drugs: Over half (54%) evaluate specialty drug costs and utilization performance through the medical benefit, and another 29% are planning or considering doing so.

Employee physical and emotional health has been hit hard by the pandemic, driving employers to invest heavily to support wellbeing and find new ways to boost the employee experience. Nearly half of employers (45%) are leveraging wellbeing vendors to help enhance the employee experience across physical, financial, emotional and social wellbeing; another 37% are planning or considering doing so in the next two years. Additionally, 52% are enhancing the enrollment experience, with 34% planning or considering doing so. And, 49% are adding more choices in all benefits; another 23% are planning or considering doing so.

“As employers update their ways of working, they are finding a challenging environment to attract and retain employees. Those employers that take action to keep their healthcare benefits affordable and easily accessible, strengthen the wellbeing of their workers and build a better employee experience will gain advantages in the future — namely a more healthy, satisfied and productive workforce,” said Jeff Levin-Scherz, MD, Population Health leader, Willis Towers Watson.

About the survey

A total of 378 U.S. employers participated in the Willis Towers Watson 2021 Best Practices in Health Care Survey, which was conducted during June and July 2021. Respondents employ 5.9 million workers.

About Willis Towers Watson

Willis Towers Watson (NASDAQ: WLTW) is a leading global advisory, broking and solutions company that helps clients around the world turn risk into a path for growth. With roots dating to 1828, Willis Towers Watson has 45,000 employees serving more than 140 countries and markets. We design and deliver solutions that manage risk, optimize benefits, cultivate talent, and expand the power of capital to protect and strengthen institutions and individuals. Our unique perspective allows us to see the critical intersections between talent, assets and ideas — the dynamic formula that drives business performance. Together, we unlock potential.

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