Employer Health Plans: Evolving to Meet Employee Needs
Employer health plans have changed over the years in response to economic influence and labor force demands. From basic offerings to robust health plans, the health benefits offered by employers have expanded, and rightly so. An effective health plan can help businesses attract and retain talent in a competitive hiring market. Beyond this, an employer’s health plan is a significant percentage of their budget. Health plans are the foundation of what helps employees, and their families stay healthy and productive.
Read on to learn how employer health plans have evolved and where they’re going.
Early Years of Employer Health Plans
Employers began offering access to company-sponsored onsite, or near-site clinics in the 1930s. In the 1940s, employers began offering health benefits more widely to compete in a tight labor market amid salary caps. Employer health benefits expanded again in the 1950s to include vision and dental packages. This was a result of the strong bargaining power of labor unions at the time.
By the 1960s, health insurance was so closely tied to employment that retirees and the unemployed lacked access. President Lyndon B. Johnson established Medicare and Medicaid in 1965 to address this issue. These programs offered health benefits for retirees, unemployed people, and people whose employers did not offer health benefits. Medicare and Medicaid have changed over time to provide greater access to quality, affordable healthcare for more people. This includes retirees, low-income families, people with disabilities, people in need of long-term care, and pregnant women.
Health Maintenance Organizations (HMOs)
In the 1970s, employers began to cut back on health benefits to mitigate costs. This sparked the creation of HMO plans which are still widely used today. HMO plans typically require patients to seek care from healthcare providers in the plan’s network, except in emergency situations. Shortly after its creation, HMOs grew in popularity. “Between 1970 and 1975, the number of HMOs increased from 37 to 183, and HMO membership doubled.” The creation of HMOs also marked a renewed focus on prevention and wellness for cost reduction.
Preferred Provider Organizations (PPOs)
PPOs were created in the 1980s to offer more flexibility in where people could seek care. This health plan allows employees to pay less for healthcare when they seek care from providers in their plan’s network. Unlike HMOs, with a PPO plan, employees can see out-of-network providers for an additional cost. PPOs quickly gained popularity over HMOs as people desired more control over their healthcare decisions. 80 million Americans were enrolled in HMOs in 2013 while 150 million were enrolled in PPO-type plans.
The Affordable Care Act (ACA)
The Affordable Care Act, passed in 2010, requires preventative care to be covered fully by health plans. Comprehensive services, called essential health benefits, must be covered on an unlimited (annual and lifetime) basis. The ACA was designed to manage healthcare costs by catching health issues early before they become more difficult and expensive to treat.
The ACA has changed healthcare by significantly expanding access for millions of Americans. Because of this law, dependents can stay on health plans until they turn 26. Health plans cannot deny coverage based on pre-existing health conditions. And dollar limits for essential health benefits have been banned meaning preventative care is available with no out-of-pocket expense. After the passage of this act, all Americans have access to health insurance in the Health Insurance Marketplace.
Employer Health Plans Today and Beyond
The needs and priorities of employees are changing. Today, employees expect robust benefit programs that include mental and behavioral health services and virtual care options. Many employees examine employer benefits when considering taking a new job. Healthcare is a significant cost for employees and families. So people want to make sure they can take care of their, and their family’s, health when accepting a new position. Offering robust health plans can give employers an edge to attract and retain top talent in a tight labor market.
Mental and Behavioral Health Services
The need for mental health services has been increasing for decades and was exacerbated by the pandemic. According to KFF, “90% of U.S. adults believe that the country is facing a mental health crisis,” with one in four adults reporting symptoms of anxiety or depression.
Employees now expect their employers to provide some kind of behavioral health services. Most respondents (81%) to an American Psychological Association (APA) survey said that mental health services coverage and support is an important consideration when looking for a new job. Employers will need to expand their mental and behavioral health coverage to meet the expectations of current and prospective employees.
Some employers are meeting this need by offering mental health services through company-sponsored onsite or near-site clinics. Others are offering increased access to mental and behavioral health services by including virtual providers in their health plan. Another way employers can expand access to mental and emotional health support for their employees is offering online resources like apps, and on-demand videos.
Virtual Care Services
The demand for virtual care options has also increased exponentially. Accelerated during the pandemic, when non-emergency care was moved to a virtual setting to mitigate the spread of COVID-19, virtual care expands access to care for many Americans.
Telehealth services, including virtual primary care, can be an efficient solution for preventative services like consultations, screenings, and counseling. Some virtual care providers offer appointments outside of traditional office hours with some services providing 24/7 access to care and same-day appointments. Virtual care can even increase productivity because it allows employees to prioritize their health and well-being while taking less time off work as they do not have to commute to and from their appointments.
When employees seek care where the quality is good, and the cost is low, employers realize significant savings. These savings can be passed on to employees through $0 copays for high-value providers. This strategy will become more popular in the coming years as employers aim to manage their healthcare costs by encouraging their employees to use high-value providers. Offering free healthcare for plan participants and their families gives employers an advantage because it helps employees take a proactive approach to their health. Employees who can take care of themselves and their families are more productive and loyal to their company.
The Alliance created a copay plan with $0 copay options for high-value providers. This plan encourages employees to play an active role in their health by incentivizing the use of high-value providers for preventive care, mental health, and shoppable procedures, like elective knee replacements.
Self-funding with The Alliance
As the cost of healthcare continues to rise, employers are increasingly choosing to self-fund their health benefit plans to manage costs, remain competitive, and increase value for their employees. Because self-funding saves employers money, they can provide better benefits and higher wages for their employees.
In 2022, sixty-five percent of workers covered by their employers’ insurance were in a self-funded health plan. Self-funded plans are popular with larger employers because they can manage the risk of higher-cost claims across many employees and their dependents. However, organizations of all sizes from various industries including businesses, unions, Taft-Hartley insurance trusts, municipalities, and school districts have reaped the benefits of self-funding with The Alliance.
The Alliance is a network for self-funded employers that offers unparalleled coverage in the state of Wisconsin. We contract directly with over 38,000 providers across the Midwest which means broad freedom of choice for employees and serious savings for employers.
The Alliance gives self-funded employers the power to increase employee access to care, improve quality, and reduce costs. We use sophisticated data mining and analytics to develop custom Smarter NetworksSM for our employer-members. Through our Smarter HealthSM Analysis, we help employers understand their data, empowering them to design a health benefit plan that directs employees toward high-quality, low-cost care. This means the employer and their employees pay less for better healthcare.
Looking for a way to offer competitive benefits while managing your healthcare spend?
Contact us to learn how The Alliance can help you design an effective self-funded benefit plan for your business and your employees.