How fully insured employers can help mitigate premium increases
Rising medical costs are pushing up premiums for fully insured employers, causing them to evaluate their options
- Rising medical costs are driving a forecasted 14% premium increase for fully insured employers in 2027, prompting the need for cost management strategies that aim to protect future employer and employee health care dollars.1
- Employers may reduce costs by adopting focused networks like NexusACO® and Core plans that promote quality care at lower prices.
- Utilizing copay-only plan designs like Surest® and tiered benefit plans encourages employees to make cost-effective health care decisions.
- Additional strategies include increasing employee contributions thoughtfully, removing out-of-network coverage, evaluating Prescription Drug Lists and collaborating with carriers to control expenses.
Health care costs are soaring, placing a significant strain on every aspect of the system, from hospitals, providers and insurers to employers and members. KFF data is projecting that the fully insured small group market will see a median premium hike of 14% for the 2027 plan year.1 Medical trend levels across the broader commercial group market are forecast to grow between 9%2 and 10%,3 largely as a result of rising hospital prices and catastrophic claims, GLP-1s and specialty medications, behavioral health utilization and complex and chronic conditions affecting more members, including younger ones. This upward trend is challenging for all employers, whether they have fully insured or self-funded plans.
Employers with fully insured health plans may feel insulated from the day-to-day financial volatility of health care costs because claims risk is largely borne by the carrier. With that said, high costs within the health care system affect all stakeholders, and rising premiums are often a direct result of these increased expenses, impacting both employers and employees.
Although employers with fully insured plans are not directly responsible for paying for how their employees use the health system, ineffective utilization patterns on top of soaring medical costs can have a significant impact on the premiums their carrier charges in the future — especially since premium rates for fully insured plans are determined by factors that include the number of employees, dependents, health risks of the population and more.
That's why employers should work closely with their carrier and broker to develop a strategy that helps mitigate future premium increases and supports their employees' health and financial well-being. Part of that strategy can mean choosing from a plan portfolio that is simpler to understand and compare — and UnitedHealthcare is actively working to make its offerings easier for brokers and employers to navigate.
1. Embrace focused networks
Quality networks, such as value-based care models that are made available through tiered plan designs like NexusACO®, can be a strategic move for fully insured employers. These networks are designed to reduce costs by encouraging the use of providers who offer quality care at lower costs. With transparent indicators displaying whether a provider is in the selected network and how they compare to other providers based on quality of care, benefits and coverage and other personal preferences, employees are better positioned to make more appropriate and cost-effective decisions, which may ultimately lead to lower overall health care expenses.
UnitedHealthcare also offers Core and Select plans, which are built on focused networks designed to help reduce costs while maintaining network adequacy. In urban areas, Core plans appear very similar to broad network plans but achieve cost savings by streamlining the provider network. As UnitedHealthcare simplifies its plan portfolio, it is also identifying opportunities to streamline the networks offered in each market — giving employers and brokers a more consistent, easier-to-navigate set of network options.
2. Consider copay-only plan designs
Copay-only plan designs, like the Surest® plan from UnitedHealthcare, may help simplify the health care experience for employees by removing deductibles and coinsurance. Employees can see upfront copays, not estimates, through an intuitive digital experience, enabling employees to make more informed decisions about providers and sites of care, potentially leading to better health outcomes and reduced out-of-pocket expenses. For instance, members who shopped for care prior to a visit were 2 times more likely to choose the lowest copay option.4
The strategy of comparison shopping can help employees make health care decisions that could save them money – and in turn help their employer save money over time, too, because better decisions may lead to better outcomes, which may reduce the risk scores of their population and keep premiums low. UnitedHealthcare is expanding these no-deductible, copay-only designs across more markets as part of its broader portfolio modernization, giving more employers access to simpler, consumer-first plan experiences.
3. Explore tiering options
Tiered benefit plans can be an effective way to manage health care costs. By categorizing health care services and providers into different tiers based on cost and quality, employers can encourage employees to choose more cost-effective options. For example, at UnitedHealthcare, when eligible members use Preferred Lab facilities, they can get their lab work done at no cost-share. This approach can help reduce overall health care spending without compromising the quality of care.
4. Increase employee health care contributions
Employers may consider increasing their employees' contributions to health care costs through thoughtful benefit buy-downs or cost-shifting strategies. This can include modest increases to deductibles, coinsurance and copays. For instance, on health savings account (HSA)-eligible plans, introducing a copay after the deductible on less-frequent, higher-cost services such as inpatient or outpatient care can significantly reduce the price of the plan. UnitedHealthcare Benefit Ally® can also help offset some of the employee contribution increase5 by providing employees with financial support for qualifying medical events.
5. Remove out-of-network coverage
Removing out-of-network (OON) coverage can significantly reduce health care costs. Out-of-network providers often charge higher rates, and the lack of negotiated discounts can lead to substantial out-of-pocket expenses for employees. By limiting coverage to network providers, employers can help ensure that their employees are receiving care at more predictable and manageable costs.
6. Evaluate different Prescription Drug Lists
Pharmacy costs are increasing rapidly, largely due to a drug pipeline that includes expensive specialty medications. Prescription Drug Lists (PDLs) serve as an effective mechanism for controlling prescription drug costs while maintaining access to coverage, with various strategies available to support this approach. By prioritizing drug coverage based on clinical value and considering cost only when clinically equivalent options exist, employers can assist their employees in obtaining necessary treatments at lower costs.
7. Reach out for carrier support in reducing health care costs
In addition to these strategies, it is essential for fully insured employers to consider the role their carrier plays in reducing the cost of care. Carriers can help by implementing practices that help to ensure claims and payment accuracy, advocating for systemic changes and negotiating the lowest network rates and pharmacy drug prices. The more proactive a carrier is in these areas, the greater the potential for lower premiums in the future.
UnitedHealthcare is also working to simplify and standardize its plan portfolio, making it easier for brokers and employers to understand, compare and support plan options. A more consistent portfolio can also help UnitedHealthcare better evaluate utilization patterns, cost-share impacts and financial performance, strengthening its ability to identify opportunities to help manage costs over time.
For fully insured employers who are not ready to take on the risk of self-funded or level-funded plans, these strategies can provide a pathway to managing rising premium costs. By working with their carrier and broker to implement focused networks, copay-only plan designs, tiering options and other cost-saving measures, employers can help their employees make more informed health care decisions. These strategies aim to support employees by improving their health outcomes and reducing out-of-pocket costs, while also helping employers maintain a cost-effective and sustainable health plan.
Share
