A trifecta of benefits trends emerged in the first half of this year that are expected to gain greater steam as we enter the second half of 2023 and HR executives will want to watch them closely—because some can directly affect your organization’s costs.
“Healthcare is your second-biggest cost, so any way that we can make sure that benefits spend is managed as efficiently as possible is going to eventually help employees,” says Kelly Conlin, U.S. Health Practice Leader and Chief Health Actuary for Buck, an HR, pension and benefits consulting firm. “Otherwise, it’s going to result in higher premiums for employees to pay year after year.”
Here are the three trends that are expected to accelerate in the coming months, as well as two emerging issues that should be on the radar of HR and benefits leaders.
Long-term care benefits catch employers’ attention
Employers’ interest in offering voluntary long-term care benefits is expected to ramp up, following Washington state’s enactment of its WA Cares Fund, a new mandatory long-term care insurance benefit that took effect in January, with employee contributions starting in July.
Other states eyeing similar plans include California, Pennsylvania and New York, Conlin tells HRE. As a result, employers need to jump on offering their own voluntary long-term care benefits program to give their employees another choice and assist them with financial wellness, she says.
“If an employee retires and later needs long-term care, they’re likely going to deplete their 401(k) assets,” Conlin notes. “As an employer sponsoring a 401(k) plan and caring about those employees, it kind of goes hand-in-hand with protecting those assets.”
She also notes that a voluntary long-term care benefits program not only provides a tax benefit to employees but can also help them get access to insurance they might be otherwise locked out of due to prior health conditions.
Employers that are considering offering long-term care would be wise to act now before their state puts in a mandatory policy, Conlin says.
YouTube: See Kelly Conlin of Buck discuss the changes in long-term care benefits
Biosimilars hit the market offering cheaper drug options
Earlier this year, anti-inflammatory biosimilar drugs entered the market and are poised to send ripples through biologic drug pricing. The trend is similar to the way generic drugs have had a huge impact on pricing for brand name medications, Paul Fronstin, director of health benefits research for the Employee Benefit Research Institute (EBRI), told HRE.
Biologic drugs are made from living sources versus synthesized chemicals and can be injected, infused or inhaled versus taken orally. They are often used to treat inflammation like arthritis as well as various cancers. Biosimilars are basically cheaper versions of a biologic drug.
In February, Amgen’s anti-inflammatory biosimilar medication Amjevita became the first biosimilar to hit the market, taking aim at biologic anti-inflammatory drug rival Humira, once the No. 1 drug in the world. Since then, a handful of other anti-inflammatory biosimilars have jumped into the market, some of which carry an 85% price discount to Humira, Reuters reports.
This bodes well for employers, says Fronstin, who recently authored a report on biologics, which are often considered a specialty medication.
Indeed, about 55% to 60% of an employer’s total drug spend comes from specialty medications, says Mark Campbell, vice president of pharmacy clinical solutions at RxBenefits, an advisory service to employee benefits consultants.
And roughly two-thirds of plan members it works with are on medication to treat anti-inflammatory or dermatological conditions, he notes.
“If you don’t have something that can help identify that you’re spending the right money on the right patient, and getting the right outcome for specialty medications, it can get very costly very quickly,” Campbell told HRE.
Drug pricing rebates show signs of shifting away
In the first half of the year, some drug makers like Eli Lilly and Novo Nordisk made pricing adjustments to their products to make them more affordable and eliminated rebates in the process, Campbell says.
This move comes as state and federal legislators put PBMs on the hot seat and called for them to deliver greater pricing transparency to employers and the Centers for Medicare and Medicaid Services (CMS) when negotiating on their behalf with drug manufacturers for lower pricing, Campbell says.
A move toward lower-priced products and away from rebates is reversing a 20-year trend in rebate expansion, in which drug manufacturers used rebates as a means to offset higher drug costs if they wanted the PBMs to list their products with employers and the CMS for consideration, Campbell says, adding three PBMs hold 80% of the U.S. market.
YouTube: See RxBenefits’ Mark Campbell discuss the changes coming in rebates and drug prices
“Next year will probably be the first time we’ll see rebates shrink as a percent of the overall spend in the last six or seven years,” Campbell says.
Other benefits trends to emerge in 2023
Two other healthcare trends to watch for as 2023 winds down include demand for comprehensive healthcare coverage for part-time employees and the rise of financial wellness solutions like medical financing to cover medical costs at point of service, says Conlin.
The latter is part of a movement to address the affordability of care. A Buck survey found participants were greatly concerned about the cost of receiving care when it’s administered more so than the cost of healthcare insurance premiums.
“That’s something that’s really bubbling up with inflation,” says Conlin. “Some of the utilization and survey information we have shows it’s actually worse than it was at the height of the pandemic, in terms of employees feeling that they really need care and aren’t getting it. This means they may have a condition and are not managing it the right way.”
HR leaders can look to medical financing as a solution for these employees, who could receive a repayment plan schedule to ensure they get the care they need.
Meanwhile, conversations about benefits for part-time employees are also being driven by external forces, namely the continued tight labor shortage in retail and other industries, Conlin notes.
“It’s been a real challenge getting the employees that they need to run their businesses right. It’s been such a tight labor market,” Conlin says. “Although a lot of these benefits are voluntary-based, [part-time employees] having access to a benefits package is helping employers be more competitive in their job descriptions.”
The post 3 cost-savings benefits trends to watch for the second half of 2023 appeared first on HR Executive.