4 Ways to Foster a Thriving Workforce Amid Rising Health Costs

4 Ways to Foster a Thriving Workforce Amid Rising Health Costs
Employee Wellbeing

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This insight is part 04 of 10 in this Collection.

Workforce

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This insight is part 12 of 12 in this Collection.

October 8, 2024 9 mins

4 Ways to Foster a Thriving Workforce Amid Rising Health Costs

4 Ways to Foster a Thriving Workforce Amid Rising Health Costs

Thriving organizations rely on thriving employees to succeed. With healthcare costs on the rise, it’s time for employers to challenge the status quo in providing health benefits. Organizations need to consider the human side of these increases and take bold action to achieve better outcomes.

Key Takeaways
  1. Organizations must become both a partner and advisor to employees and their families to successfully offer high-quality, cost-effective healthcare.
  2. Forty percent of employees have delayed care because they couldn’t afford it, increasing costs. Improving affordability for employees will ultimately reduce healthcare costs.
  3. Increasing accessibility and inclusivity can help remove additional barriers to employee health and wellbeing.


The modern model of health benefits is facing a crisis. Forecasted cost increases are accelerating year-over-year, from 7 percent in 2023 to 8.5 percent in 2024 and 9 percent in 2025. Near double-digit increases in costs for the past several years have led employers to make greater investments in healthcare benefits, in turn affecting other total rewards budgets. And what is there to show for this increased spending? Life expectancy is still below pre-pandemic levels, and more and more employees have health insurance they can’t afford to use due to out-of-pocket costs. Additionally, chronic conditions like diabetes, cancer and hypertension are rising and starting at a younger age.

Thriving organizations rely on thriving employees. But rising healthcare costs create challenges in achieving this level of success. Many employers remain dedicated to improving their employees’ overall wellbeing despite this high-cost environment. Here are four key areas to focus on to keep workforce needs at the top of business leaders’ priority lists.

1. Help Employees and Their Families Find High-Quality Care

Despite the persistent notion that affordability and quality are competing priorities, guiding employees and their families to high-quality, cost-effective care can help improve healthcare outcomes, while also reducing costs.

Wide variations in quality and cost exist across physicians, hospitals and other healthcare providers. Yet, most plan designs and network structures don’t make that variation clear to plan members. This results in unintentionally enabling choices that lead to higher cost and poor health outcomes.

Value-led options, meaning those that prioritize high-quality, cost-effective care, are expanding for employers. For example, high-touch provider guidance can help employees and their family members find and use high-quality and cost-effective care. Variable co-pay designs based on provider cost and quality can incentivize the use of improved and more affordable health care choices. Other strategies include centers of excellence networks for a variety of elective surgeries and tiered plan designs, where higher quality providers are the lowest cost option.

Prescription drugs are another important area to address. Affordable prescriptions can help with drug adherence, which in turn keeps long-term treatment costs down while also keeping people healthy and able to work. By focusing on affordable medications, organizations can help their employees:

  • Better consumer education. This includes requesting generic medications where available, asking for a 90-day supply of medications (which can help with both adherence and cost) and reminding employees that preventive drugs are covered from the first dollar by high-deductible health plans.
  • Implement a biosimilar strategy. This is when plans favor biosimilar medications on a formulary that can drive costs down without compromising clinical outcomes.

Cost increases are inevitable, but the forecasted 9 percent rise assumes employers don’t make significant plan changes. While shaving off a percentage point or two in past years has been enough, the current environment demands stronger action. Employers should challenge the status quo and be willing to explore new ways of providing affordable care — only then will companies see positive results.

2. Make Affordable Healthcare a Top Priority

9%

The average cost of employer-sponsored healthcare coverage in the U.S. is expected to increase 9 percent, surpassing $16,000 per employee in 2025 unless employers take action to reduce it.

Source: Aon's Health Value Initiative database4

Employees are said to have “high affordability” when they spend less than 5 percent of their income on healthcare costs (including premiums, deductibles and out-of-pocket costs). They are considered to have “low affordability” when that number is above 10 percent. In the U.S., about one in five employees have low healthcare affordability,1 leading some to forgo necessary healthcare services that can result in higher costs when a health condition worsens. But it’s not just those with low affordability who face financial barriers — 40 percent of employees say they have delayed care due to cost, which can impact their on-the-job performance. About one in six employees say their work has suffered due to a health issue they couldn’t afford to address. Taken together, the data reaffirms that improving affordability is important to both employees and employers alike.

Sixty percent of employees with low affordability are women. Specific programs that can help include expanded coverage, financial support and resources across a range of health needs and life stages — from pregnancy and family building (coverage for doulas and midwives, post-partum support, lactation accommodations) to parenting, caregiving, and perimenopause and menopause.

While some employers have begun to take more aggressive steps to address affordability for employees, there is potential for more to be done:

  • About a quarter of employers set employee contributions based on pay to make purchasing coverage more equitable, and about the same number offer pay-based plan design variations like deductibles, out-of-pocket limits and health savings or health reimbursement account contributions.
  • Supplemental health plans that help employees with large, unplanned medical expenses — like critical illness, accident and hospital indemnity — are offered by more than two-thirds of employers on an employee-paid basis, with another 16 percent offering them on an employer-paid basis.
  • About three in 10 employers allow employees to access their full-year health savings account balance at the beginning of the plan year.

40%

of employees have delayed necessary care due to the cost.

Source: 2024 Aon U.S. Health Survey

Learn More
Quote icon

Affordability is a critical area for employers to innovate and challenge the status quo.

Neal Mulville
Program Leader, Thought Leadership, North America
3. Improve Access to Care

Beyond costs, there are other reoccurring systemic barriers to health and wellbeing that employers may be able to help with. Access to care is particularly an issue in primary care, mental health care and OB-GYN care.

  • 01
    Primary Care Access

    Aon’s research shows more than a quarter of employees live in areas with high primary care shortages. These gaps can be addressed with virtual primary care services, virtual or on-site healthcare screening services and digital health apps to help manage chronic conditions.

  • 02
    Mental Health Access

    Half of employees are in areas with shortages of mental health clinicians. This can be addressed through virtual mental health services and digital coaching. Multimodality care, such as group therapy, is also available virtually. Digital and self-guided tools can help support emotional wellbeing.

  • 03
    OB-GYN Access

    Half of the counties across the United States have no practicing OB-GYN. This is also an area where virtual options can play a role with the emergence of virtual OB-GYN care, including the ability to administer at-home pap smear kits.2

4. Ensure Inclusive Care for all Employees and Their Families

In addition to provider shortages, members may face additional barriers and challenges in accessing high-quality, culturally competent care. A Kaiser Family Foundation survey found that one in four adults report negative provider experiences that have impacted their health or health access, including unfair treatment or a lack of language access. Black, American Indian and Alaska Native (AIAN), LGBTQ+ adults and women were more likely to experience negative interactions.3 Inclusive care recognizes the unique identities, backgrounds and perspectives of all employees and their families. It includes features such as access to providers that understand and support their unique needs, messaging that resonates with their cultural background and resources to address social determinants of health.

Quote icon

Inclusivity means providing the same opportunity to access care — from mental health and coverage for women’s health to offering gender affirming care. Inclusive benefits are critical for employers to attract and retain diverse talent.

Rebecca Warnken
Senior Vice President, Health Solutions, North America

Challenging the Status Quo can Help Employees and the Organization Thrive

With healthcare costs increasing at a rate not seen in a decade, doing nothing isn’t an option — nor or is it enough to rely on the same levers as in the past to address these new challenges. Increasing costs are affecting employees’ financial wellbeing, and by extension, their engagement and productivity. In this environment, the role of employer health benefits has never been more crucial.

Providing better healthcare is possible. Healthcare is an investment in your people, and like any investment, there is a time for conventional wisdom and there is a time for innovation. By focusing on quality, affordability, accessibility and inclusivity, companies will help both their employees and business thrive.

Aon’s Thought Leaders
  • Janet Faircloth
    Senior Vice President and Thought Leadership Leader, Health Solutions, North America
  • Neal Mulville
    Program Leader, Thought Leadership, North America
  • Rebecca Warnken
    Senior Vice President, Health Solutions, North America

1 U.S. Health Survey | Aon
2 OB-GYN workforce shortages could worsen maternal health crisis | Roll Call News
3 Survey on Racism, Discrimination and Health: Experiences and Impacts Across Racial and Ethnic Groups | Kaiser Family Foundation
4 Database includes data from over 950 U.S. employers representing approximately 6.7 million employees

General Disclaimer

This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice. While care has been taken in the production of this document, Aon does not warrant, represent or guarantee the accuracy, adequacy, completeness or fitness for any purpose of the document or any part of it and can accept no liability for any loss incurred in any way by any person who may rely on it. Any recipient shall be responsible for the use to which it puts this document. This document has been compiled using information available to us up to its date of publication and is subject to any qualifications made in the document.

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