With expected 6% rise in health costs, 2020 may be year of 'activist' employer

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PwC's Health Research Institute has released its latest report on healthcare spending trends. (Getty/utah778)

The next calendar year is shaping up to be the year employers fully embrace an activist role in healthcare, according to a new report. 

PwC Health Research Institute (HRI) issued its "Behind the Numbers" report for the coming year in which it projects medical cost trend will increase by 6% in 2020—a hike on par with the past several years. 

As prices have been increasing consistently in recent years, employers are set to try some new tactics to control healthcare spend, Ben Isgur, leader of HRI, told FierceHealthcare. “Employers are taking matters into their own hands,” Isgur said. “They’re becoming employer activists.” 

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PwC healthcare costs
(PwC Health Research Institute)

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Employers’ desire to more effectively manage healthcare spend previously meant shifting more and more costs to employees. However, continuing that trend is untenable, according to the report, and both employers and employees report dissatisfaction with high-deductible health plans. 

A survey from the National Business Group on Health late last year found similar results—employers are looking to move away from piling additional costs on workers and are instead looking to design benefits packages around high-performance networks or direct contracting with providers

PwC employer clinics
(PwC Health Research Institute)

This shift will also translate to more actively seeking to open on-site clinics or expand existing offerings, according to PwC’s report. Previous PwC research found that 38% of large employers with 5,000 or more employees offered on-site healthcare in 2019, up from 27% in 2014.  

An additional 13% told HRI researchers that adding an on-site clinic or health provider was under consideration. Big-name technology firms including Amazon, Apple and Tesla opened in-house healthcare clinics in 2018, according to the report. 

RELATED: Health insurance deductibles up 150% over last decade—analysis  

Isgur said that having an in-house clinic not only allows employers to steer workers toward lower-cost options for care but also serves as an effective recruitment tool. He said an example of this is in the oil industry, many of which offer clinics in oil fields as a way to attract workers. 

For those who may not be offering in-house care options, employers are also going to begin nudging their workers to lower-cost sites of care. This means providing those employees with clear “menus” of what their benefits cover—which may also include helping them navigate to wellness programs—so they’re not responsible for the shopping themselves. 

For example, PwC found 49% of consumers would be willing to have a telemedicine visit in place of an in-person physician visit, which would be a lower-cost option. However, 30% said a lack of price transparency is a major barrier to shopping for healthcare, and many employees need help with insurance literacy to navigate these decisions. 

“Employees themselves don’t know what’s all available to them,” Isgur said. “There’s an opportunity there for technology.” 

RELATED: Cross-industry partnerships, increasing consumerism to drive more healthcare M&A in 2019 

Employers are also investing more in providing mental health services, which does inflate costs and spending in the short term but has long-term benefits for the workforce, according to the report. PwC found that 75% of employers offer some type of mental health program, compared to 34% in 2014. 

Part of that increase is due to legal requirements, but Isgur said executives PwC has interviewed are very invested in these trends. 

“Not all inflators are bad,” he said. “We have an inflator because employers are making their employees much more aware of mental health.” 

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