How Health Insurers Can Retain Employer Groups

Rising healthcare costs are a consistent challenge for insurers and employers, but with costs increasing at a much faster pace, the environment has become even more stressful. In recent years, many employers have pursued the strategy of switching health plans in an attempt to rein in costs. But switching can be an administrative burden and very disruptive to employees and their families. To retain employer groups – and attract new business – carriers are exploring innovative ways to control costs while delivering superior experiences.  

The Impact of Rising Healthcare Costs 

The KFF 2024 Employer Health Benefits Survey revealed that average premiums for employer-sponsored family health coverage had increased by 7% year over year to reach $25,572. Over the past five years, average family premiums for employer-sponsored coverage have increased by 24%. Employers have taken on the lion’s share of increases, with worker premium contributions increasing only by 5% since 2019. However, workers have also faced rising costs when utilizing their benefit plans. Over the past 10 years, average deductibles have increased by 47%. 

As a result of high costs, many workers have trouble paying for the care they need. The Commonwealth Fund found that 43% of people with employer coverage struggle to afford their care, while 38% of respondents in a Gallup poll said they or a family member had put off care in the past 12 months due to costs – and 27% said it was for a somewhat serious condition. 

However, delaying care may lead to worse health outcomes and the need for even more expensive treatments in the future. Meanwhile, if workers aren’t using their coverage, employers don’t see the returns in worker productivity and retention that employee benefits are intended to provide. It’s an unsustainable situation – something many employers are now beginning to realize.  

Employers Open to Switching Plans 

McKinsey’s 2024 Employer Health Benefits Survey found that approximately two-thirds of employers are interested in switching carriers sometime in the next four years. As a result of plan switching, 12 million people could be under a new plan design by 2030 – a market share of approximately $500 million. 

Many employers said they were looking for alternative plans that could reduce costs and improve the member experience. Some carriers have been rolling out plans that could result in estimated cost savings of 10% to 30% while boosting member engagement through innovative designs and strategies.  

A Crisis and an Opportunity 

For carriers that aren’t working on novel plan designs, the current situation may represent something of a crisis. Retaining business isn’t as simple as lowering prices – the cost of care has been rising due to a number of factors, including rising prescription drug costs, an aging population, and an increase in chronic conditions. To stay solvent, carriers need accurate pricing that reflects expected expenditures. However, if carriers keep raising prices, employer groups will explore other options. With traditional plan designs and processes, this may seem like a no-win situation. 

However, this could be a golden opportunity for carriers that succeed in implementing innovative plan designs that lower costs while improving experiences. Those that do will be more likely to retain their customers and be seen as a long- term strategic partner, versus a short-term transactional relationship. Moreover, carriers will be better positioned to gain business from customers who are leaving other insurers.  

Technology Holds the Key 

Over the next few years, some carriers will come out ahead, while others will lose ground. Technology will be a major factor in providing this competitive advantage. 

To retain employer groups, carriers need: 

• An efficient system that minimizes overhead costs. Automation and less reliance on manual work and disparate documentation reduces the hours needed to carry out repetitive processes. This results in lower operating costs, which helps carriers better manage costs. 

• A flexible system that makes it easy to roll out new plans and updates. When carriers can manage benefits in a single view, update benefits across multiple plans, and maintain traceability, they have the flexibility necessary to roll out novel plan designs quickly.  

• A reliable system that supports a positive member experience. From benefit plan design to underwriting to claims, your system should be integrated to provide a fast, convenient, and seamless experience. When everything goes smoothly behind the scenes, members will have a much more positive experience.  

FJA’s modular platform, combined with industry expertise and strategic collaboration, empowers carriers to meet the needs of their employer group customers. We offer solutions and a partnership that delivers efficiency and innovation, with a configurable design that enables carriers to integrate new technologies as they emerge. Our goal is to make the insurance experience better for everyone. Learn more.