Strategies for Employers to Cut Rising Healthcare Costs

TL/DR –

The 2024 Lockton National Benefits Survey shows a shift in employer benefits strategies, with cost reduction becoming as important as talent attraction and retention amid rising health care costs. The survey gathered responses from 1,611 employers across the U.S., and found a closing gap between those who cite attracting and retaining talent as the most important factor in benefit decisions (33%) and those who said reducing costs (29%). With health care costs projected to rise by an average of 6 to 8 percent next year, employers are adopting more conservative strategies to manage costs, including enhancing access to care, providing services for overall wellbeing, using a high-deductible health plan, and offering telemedicine.

The 2024 Lockton National Benefits Survey Highlights Shift in Employer Benefits Strategies Amid Rising Health Care Costs

The recent 2024 Lockton National Benefits Survey uncovers a change in employer benefits approaches, with cost cutting now on par with talent recruitment and retention due to increasing health care expenditures.

The survey, collecting input from 1,611 American employers, found that the gap between those highlighting talent attraction and retention (33%) and those prioritizing cost-reduction (29%) in benefit decisions has significantly narrowed. Although talent attraction and retention was the top priority in 2022 and 2023, by 2024, cost-reduction measures were almost equally as important.

As the health care cost is projected to escalate by 6 to 8 percent next year under existing market conditions, employers are adopting more prudent strategies to mitigate these costs.

Employers are focusing on improving health outcomes and cutting costs by facilitating better access to care via multiple modalities, as well as providing services that promote overall wellbeing, such as family building benefits and mental health care.

Among self-funded employers, strategies to manage expenses include high-deductible health plans (85%), offering a tiered network within a single plan (33%), and specialty care management carve out (26%). Larger employers are more likely to direct employees towards high-quality, low-cost care.

A surge in digital and virtual solutions, particularly in larger groups, is noted, with telemedicine offered by 96% of all respondents. Also, 40% are providing telemedicine for mental/behavioral health care, according to the survey.

Despite these initiatives, the necessity to control costs is not anticipated to lighten soon. The survey underscores the need for sponsors to understand their philosophies to strategically devise their plans for cost reduction and emphasizes the significance of monitoring innovative tactics employers will adopt to refine their plans in the upcoming year.

For more insights, visit Lockton’s website.

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