The outdated health insurance system is feeling increasingly less safe and prudent for employer-sponsored health plans, making change more attractive and attainable. What’s behind this significant shift?

In a recent Vitori Health Digital Forum, hundreds of advisors and employers shared the key factors that have heightened their willingness to take a more progressive approach to employer-sponsored health plans. Behind these dynamics is a compelling impulse to seek a competitive advantage, avoid future risk, and not lag behind more forward-looking peers.

1. Health Care Cost Increases
   Employers and advisors are tired of the continuous cost increases in the legacy insurance system. They are no longer willing to shift these costs to employees, who have seen their disposable income dwindle.
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2. Self-serving Industry Practices
   Continual revelations of unethical and potentially criminal practices on the part of hospital systems, insurance carriers, PBMs, and traditional insurance brokers have raised employer awareness that the legacy system does not serve their interests.
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3. Talent Acquisition and Retentions
   To win the war for workers and talent, employers must free up money to increase salaries and bonuses, improve benefits, and more.
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4. Reduced Market Competition
   Mergers and acquisitions among and between health systems, insurance carriers, PBMs, and pharmacies continue unchecked, each one reducing competition and increasing prices. Employers are demanding more competitive and more cost-effective health plan options.
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5. Increased Adoption of Alternatives
   Approximately 1 in 15 employers currently deploy an alternative to legacy insurance carriers and PBMs. That number continues to grow as employers realize the benefits of alternatives.
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6. Regulatory Actions
   Incumbent stakeholders are under tighter scrutiny from the Healthcare Price Transparency and No Surprises Acts, elements of the Consolidated Appropriations Act, proposed prescription drug pricing legislation, and more.
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7. Fiduciary Responsibility
   Employers and their boards of directors, are increasingly concerned that they are breaching their fiduciary responsibility to manage shared employer and employee health plan assets and expenses, exposing them to the harsh litigation risks that have impacted employee retirement plans.

Collectively, these factors are accelerating employer transitions to health plans that reduce overspending, offer better member service, and free up money for workforce and business investments. Our ability to meet this market-driven need with a unique and comprehensive next-generation health plan helps to explain Vitori’s exponential growth.

A recent article posted to JAMA Network reveals how the dysfunctional interests of insurers, hospitals, pharmaceutical companies, and PBMs ultimately reduce quality of life for U.S. employees through financial distress induced by the health benefits market.

According to the authors, “It is assumed that insurers compete intensely to improve the value received by employers and employees by negotiating to keep prices down and advocating for employers and employees.” This is not the case, however.

The article shares that “…the mean premium for family coverage increased by 55% from 2010 to 2020 (from $13,770 to $21,342) and employee contributions increased by 40% (from $3,997 to $5,588). Deductibles per enrolled individual increased 110% (from $646 to $1,364) and, to reduce monthly premium deductions from their paychecks, 31% of employees are now enrolled in high-deductible health plans.

“Partly as a result of employer-paid costs of employee benefits rising faster than employer income…take-home pay for most workers stagnated, with real median wages increasing 11% from $62,865 in 2007 to $69,560 in 2019, depriving employees of wage gains resulting from growth in their productivity.

“In the absence of intense counterpressure from insurers, hospitals and most other health care organizations have prioritized growth of high-priced services and developed costly marketing strategies, rather than restructuring to become a low-cost, high-quality solution for employees.”

The top three health insurers work aggressively to increase their monopoly market share of provider contracts that offer little value yet keep providers from pursuing arrangements with alternative payers. Compounding this, healthcare competition is severely hindered as more health systems, many of which don’t pay taxes, merge and purchase hospitals and physician practices, raising prices with each acquisition.

In examining insurance company revenue, profit, and shareholder dynamics, the authors illustrate, shockingly, that “Even if an insurer manages to improve profit margins by 20% while slowing per capita spending growth to 2%, their projected share prices would be lower than if per capita spending growth continued to increase at a 4% rate.” Read that again.

Employers and employees are effectively trapped in this dysfunctional industry matrix that prioritizes rapid growth and financial performance for shareholders.

Although higher healthcare costs are an obvious result of this aberrant system, other costs are more subtle and toxic. In an effort to maintain financial viability, employers often transfer higher health plan costs to employees through lower or no wage increases and higher payroll deductions, plans deductibles, co-insurance, and co-pays.

In the end, employees experience net wage stagnation, are unable to pay their out-of-pocket share when they use healthcare, avoid getting preventive and chronic care, and endure a diminishing quality of life as a direct result of an underperforming healthcare market.

What’s needed are seismic structural changes throughout the industry and better enforcement of regulations designed to accelerate price transparency and competition. In the meantime, employers play a key role in disrupting a system that actively works against the best interests of their organization and their employees.

How? By choosing a high-performance health plan that can save 30%+ over legacy insurance carrier plans while delivering high-quality care and improved member support. When better benefits are offered at a lower cost, employers can improve the quality of life of their workforce and their families.

As we approach two years of coping with COVID-19 and its latest variants, there is a burgeoning need for mental health services. The American Psychological Association (APA) describes it as a “health care tsunami” with 84% of psychologists reporting an increase in demand for anxiety treatment since the start of the pandemic.

This demand has exacerbated the usual difficulties in getting needed mental health care: providers who don’t accept insurance plans, practices closed to new patients, the high cost of out-of-network care, and a limited number of local (and overburdened) practitioners in some areas.

Decreased Productivity

Businesses are also adversely affected by COVID. It’s hard for employees to stay focused and efficient when they’re worried about their health and safety at work, at home, and in the community. Concerns are compounded with children in school or daycare and family members in shared or congregate housing.

As a result of these pandemic-related stresses, Harvard Business Review reports that most companies “are less productive now than they were 12 months ago” as employees struggle to balance the new realities of work and home. The best way to improve productivity is for employee health plans to effectively reduce the barriers to quality mental health care.

Telehealth Leads the Way

Collaborative technologies have changed the way we work and access health care during the pandemic, and that change is here to stay. According to an APA survey, 96% of psychologists said that telehealth “has proven its effectiveness as a therapeutic tool” with 93% intending to continue providing telehealth options after the pandemic.

Telehealth eliminates the physical barriers to quality mental health services, making it available to all employees regardless of location. It can also make such care financially accessible. Forward-looking employee health plans offer telehealth services that are completely free to members. It’s a small price to pay for the priceless benefits of employee wellbeing and productivity.