Rising healthcare costs are hardly a secret. However, employers and consumers aren’t the only ones feeling the pinch – with costs surging, health insurers are struggling to keep plans affordable for their clients and members. Technology can help insurers contain current costs and become more resilient against future market challenges.  

Taking Control of Costs 

Health care costs are on a steady rise driven by numerous factors, including increasing hospital costs, expensive prescription and specialty drug costs, high prevalence of chronic conditions and comorbidities, and an aging population. Overall, health care costs are outpacing inflation, and this trend doesn’t show any signs of slowing down. 

Employer-based insurance is a bedrock for the coverage of so many U.S. workers, yet some businesses are struggling to afford it. Looking at insurance coverage between 1996 and 2023, the Employee Benefit Research Institute found that the percentage of employers offering health insurance reached a near record low in 2023. This decline was driven primarily by a decrease in the number of small businesses offering coverage. So far, premium adjustments have not been able to keep up with spending increases, but if premiums are raised significantly beyond current rates, more employers may have to reevaluate their coverage options – and small businesses are likely to be most impacted. 

Insurers have limited levers they can pull to rein in costs to keep benefits and coverage affordable for their customers – often focusing on either underwriting practices or claims management – but there’s only so much they can do in these areas. Technology can help insurers effectively target current expenses driven by inefficiencies and poor processes, as well as provide a safeguard to adapt to future challenges.  

How Technology Reduces Costs 

Investments in technology pay off. According to CIO Dive, research from the Hackett Group showed world-class digital companies managed to cut outsourcing and overhead costs across general and administration functions by 29%.  

When health insurers invest in technology, they: 

  • Reduce labor requirements. Technology doesn’t replace workers, but it does reduce workloads. As a result, insurers can often grow without hiring more staff. 
  • Avoid human error. When you transition from manual processes to greater automation and connectivity across departments and teams, it’s much less likely an employee’s mistake will result in issues that may impact member coverage or claims payment. This improves operational efficiency and provides a better customer experience. 
  • Reallocate skilled workers. When your workers aren’t bogged down with inefficient and error-prone processes, they can focus on activities that are more likely to add value to your company.  
  • Prevent burnout and turnover. Turnover is expensive. By reducing workloads, you also reduce burnout levels, which can help improve employee retention and satisfaction.  
  • Adopt new technologies as they emerge. Old systems were not designed to integrate easily with new technologies. However, with modern, modular systems, you can add new technology as it emerges and your business needs change. 
  • Seize opportunity. Slow, manual processes are expensive and make it difficult to adjust and respond to market and regulatory demands. Technology can help – for example, by updating benefits across multiple plans simultaneously or by streamlining CMS filings.  

Many health insurers realize they need to embrace technology – the only question is where to start. For the greatest impact, we recommend a platform that streamlines your key operations and addresses your major pain points.  

See for yourself how FJA’s modular platform will simplify your operations and automate business processes. Request a demo.  

costs insurance overhead