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With health care costs on the rise, advisors and their employer clients must pay close attention to their employer-funded healthcare coverage. Advisors should encourage their clients to take a deep dive into their data in order to identify savings and tailor benefits to meet the needs of their employees and covered dependents. Data analytics have become a critical part of thoughtful spending and can make a significant difference for those with employer-funded health insurance.
The cost of healthcare in the United States continues to skyrocket at a rate of almost 5% per year for the last three years. Looking at these numbers and knowing the burden that higher costs place on businesses and their employees, it is evident that advisors and employers need to think strategically about finding savings within their employee benefits spending. According to a joint study by MIT and IBM, workforce analytics play a big role in overall organizational success, from employee turnover and satisfaction to benefits utilization and pharmacy spending. With data like this, it’s easy to see why advisors and employers are embracing employee data analytics as part of their overall strategy to deliver results that improve the health of employees and their company’s bottom line.
A survey by America’s Health Insurance Plan (AHIP) found that more than 56% of participants said whether or not they like their employer-sponsored health coverage is a significant factor in job satisfaction and longevity. The same survey found that 46% of U.S. adults found that health benefits were a major factor in choosing their current employer.
"We were surprised to see such a large percentage of American workers who indicated the importance of health coverage in choosing and staying at their job," said Phillip Morris, former vice president of Luntz Global Partners, which conducted the survey for America's Health Insurance Plans (AHIP).
Ultimately, however, while upwards of 71% of employees are happy with their health coverage, high costs remain a big worry and have become a leading source of concern and dissatisfaction.
"You have to know your employees and what they want from their health benefits,” says Paula Harvey, SHRM-SCP. Advisors and employers must understand what health benefits their employees value, which are used, and which benefits could provide the most value for their money. Similarly, since prescription drug coverage remains the most important identified benefit by respondents, a focus on pharmacy spending and benefits is crucial to keeping costs down and the utilization of cost-effective drugs, up.
"Employer-provided insurance is the cornerstone of the U.S. healthcare system, covering over 150 million Americans and spurring innovation that helps improve the overall health care marketplace," said David Cordani, president and CEO of Cigna. "Employer-provided coverage helps employers create localized communities of health to help their employees stay healthy and productive while pursuing targeted innovation that works for their unique needs."
So, what is the best way for advisors and their employer clients to meet the needs of employees without a massive increase in cost and the burden of underutilized benefits? A thorough data analysis. The more data available, the better the insights. With a powerful analytics engine, advisors can offer employers a clear picture of exactly how their organization uses its healthcare benefits, where costs are piling up and can uncover pricing errors and hidden savings within a variety of areas, from pharmacy spending to improper coding. Take the first step, and put the data to work. Investing in intelligent analytics is a must for any advisor and any client with employer-funded health benefits.
Early adopters of benefit analytics strategy are seeing big dividends. According to Thomsons Online Benefits, H.R. programs that use benefits analytics “harness it to drive better measurement of their programs and influence key outcomes,” such as utilization and pharmacy program management.
Knowing what is happening in an employee population is helpful. That’s what you get from a report. But understanding why problems are occurring is critical if you want to fix them. That’s the value of analytics for advisors.
When the root cause or hidden driver of issues is identified, organizations can target programs and interventions that specifically address them. And these important decisions, especially those that affect the bottom line, can’t be made with limited understanding. This thinking should extend all the way through to employee benefits. A full analysis of employee benefits and the convergence of multiple types of coverage (including medical, workers compensation, and pharmacy), can have a significant impact on savings, plan design, and performance.
The more data sources that are collected and analyzed, the greater the actionable insights advisors and employers will have to make strategic decisions. For example, while collecting medical claims data is vital, it gives an incomplete picture of the global impact on the company. With multiple data sources, that medical data can show how an employer population’s health is impacting productivity, absenteeism, workers’ compensation, and safety.
Bringing all the silos of health and welfare, or better yet, all human capital data together will give the most comprehensive view of a benefits program performance. Correlate health benefits risk with workplace risk to assess employees’ ability to safely and productively perform their jobs. Now is the time to consider including 401(k) data, to get a comprehensive picture of how employee finances can affect productivity and the retirement readiness of your workforce.
Do you know how your clients’ benefits programs stack up to competitors or regionally? Benchmarking can provide a wealth of information, like how much employer clients are paying for medical services or prescription drugs compared to their competitors. Advisors can use this information to negotiate better rates with insurers or pharmacy benefits managers.
Smart collection of historical data can also be leveraged for predictive analytics. In order to effectively look ahead, a clear view into prior use of employee benefits will help advisors tailor a strategy that meets the needs of the organizations they serve. Every employee population is different, so programs need to be thoughtfully curated based on the needs of those who use them. Past indicators and predictive analytics can provide an incredibly accurate picture of a future state and help companies plan a cost-effective and productive way forward.
Now is the time to harness the incredible advantages of data analytics. Advisors who embrace the power of data and the force of intelligent insights will be ahead of the curve when it comes to serving their employer clients and their employee populations. Analytics can set any advisor or employer apart from the competition by giving an edge when it comes to understanding cost, utilization, satisfaction, and plan performance.
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