September 15, 2020

Reducing Costs in 2021


Health benefits costs are nearly certain to rise in 2021.

They’ve trended upward for years, and the current state of uncertainty over COVID-19 isn’t slowing things down.

That’s why it is critical for employers to think about reducing health costs right now, rather than when it’s too late. Having a solid plan when entering 2021 will help those who are trying to reduce costs.

Here are five ways employers can try to reduce costs:

Dig Into Health Costs

Employers would never over pay for the materials they use during production, so why is healthcare any different?

“First, as an employer, you need to diagnose your spend in order to cure your medical and pharmacy expenses,” Apex Chief Innovative Officer Stan Jackson said.

The first thing to identify is which disease categories are contributing to your organization’s highest plan spend. For most employers, oncology, cardiology and orthopedics are the top culprits of high costs in a health plan. In most cases, high quality services can be found for those areas with reasonable costs.

Pharmacy expenses are another avenue for reducing spend. Providing a pharmacy benefit that maximizes manufacturer rebates and provides the lowest cost to the member at the pharmacy counter is the easiest way to reduce costs.

Understanding where money goes can help focus cost-cutting efforts. For instance, if employees are going to the emergency room for every health visit, employers know they must promote more health literacy among their workforce.

Embrace Technology

The health care landscape of today is starkly different than the one even a few years ago. Now, telemedicine is the name of the game.

There are numerous ways for individuals to take charge of their health care without the hassle – or added cost – of in-person consultations. There are also several benefits to choosing telemedicine.

“The pros are the convenient and nearly immediate access to a medical professional for the consumer,” Jackson said in an Indiana Business Journal thought leadership roundtable. “The cons are that the physician is heavily reliant upon the patient to provide complete and thorough information about their condition. Someone’s temperature, blood pressure, or respiratory and oxygen levels, for example, may not be properly measured.”

However, the current global pandemic has shown telemedicine will be a major player in the healthcare future.

“It will be the gateway to care for patients with infectious disease or for anyone who may have been exposed,” Jackson said.

Consider Alternative Plan Options

Not every plan option will work for every organization. For years, PPOs were the standard, but now high deductible health plans with savings options are having their moment. These plans enable greater health consumerism and put the decision-making power into employees’ hands. Employers should consider offering mechanisms like HSAs, FSAs and HRAs to help shift costs without compromising health care quality.

At Apex, we compile a Benchmarking Survey Report that can help your organization decide what plan is best by comparing the various types offered in Indiana. According to our findings in 2019, nearly 50 percent of Indiana employers offer just one health plan option to its employees, while only 39 percent offer two plans. Only 13 percent offer three or more options.

“Health insurance is the most important benefit to your employees, right after monetary compensation,” said Apex Executive Advisor Scott Long in our Benchmarking Survey Report. “The answer to this questionis unique to each organization and increasingly to each age demographic, especially considering there are four generations in the workforce with very, very different views of world and benefits needs. So, to be competitive with other Indiana employers trying to attract the same top talent, you should seriously weigh the pros and cons of offering multiple health plan options.”

You can request our most recent Benchmarking Survey Report here

Require Active Enrollment

Some organizations allow employees to passively enroll in their health benefits. This may seem like a nice timesaver, but it can actually hinder employee health literacy.

Instead, employers should require active enrollment among employees. This approach would force employees to review all their benefits options each year before making selections. Not only does this make employees consider important life events, it also affords them an opportunity to re-evaluate the benefits they’re paying for and potentially not using.

Ultimately, active enrollment can make employees wiser health care consumers, improve proactive health care and lower overall health expenditures.

Utilize Analytics

Simply having data at your hands isn’t enough anymore.

Analytics can help your organization determine where benefits may be lacking, or even identify unnecessary spending. But it can also tell your company how much a large claim can impact your plan. Having analytics can help you get ahead of those issues.

“By utilizing analytics, you can identify gaps in care before they lead to a catastrophic claim,” said Apex Director of Population Health and Analytics Sarah Michaels. “Getting members back on a proper care path is one of the easiest ways to improve employee health and lower health claims.”