Variances in health care costs for self-funded employers
Health care costs vary across the country — and that variation can make an impact on the costs of employers offering self-funded plans.
For employers with self-funded or Administrative Services Only (ASO) health plans, navigating the complexities of health care costs can be a daunting task. However, understanding state-by-state variations and implementing strategic cost-saving measures can significantly alleviate financial burdens while improving employee health outcomes.
An analysis of UnitedHealthcare data1 revealed that the average per member, per month (PMPM) cost nationwide among self-funded employers is $441. However, the cost differential between the least and most expensive states is a staggering $470 — from an average PMPM cost of $279 in Arkansas and Mississippi to $749 in Alaska. This significant variation underscores the importance of regional considerations in plan design and cost management.
Cost-saving strategies for employers with self-funded plans
Evaluate plan design options
Plans that clarify care costs upfront, prioritize quality care and/or require employees to select a primary care provider (PCP) are designed to help employees make more informed decisions about their care, which may lead to lower costs.
Weigh different network choices
While broad networks may offer more choice, focused and/or tiered networks work to help control costs with lower negotiated rates. Some are organized around value-based care arrangements, where providers and health systems are compensated based on quality of care rather than quantity of services rendered.
Understand population-specific challenges
Certain employees may experience poorer health outcomes and higher health costs simply based on where they live. Employers can use health data from sources like America’s Health Rankings to help tailor benefit strategies to their population’s specific challenges.
Educate employees and promote preventive care
Helping employees understand the financial impact of their health care choices may help them make more informed decisions (e.g., choosing urgent care instead of an ER). And routine preventive care may help employees catch conditions sooner, when they are typically less costly to treat.
Support wellness with incentive programs
Incentive programs like UnitedHealthcare Rewards that reward participants for completing healthy activities, such as walking, cycling, tracking sleep and more, are designed to help get employees more engaged with their benefits and their health.
Make data-driven changes to improve performance
Employers can turn to their carrier, broker or consultant for help in understanding their health plan performance data, pinpointing opportunities to close gaps in care and tailoring cost-management strategies.
Unique challenges in rural areas
For employers with large populations of employees living in rural areas, these cost-saving strategies may become more critical to consider, since rural populations have a 40% higher rate of preventable hospitalizations and a 23% higher mortality rate.2 Unlike their colleagues in urban and suburban areas, employees living in rural America may face disparities like provider shortages, long distances to travel for care and a higher prevalence of chronic conditions. To help address these challenges and reduce the cost of care driven by these employees, employers may want to ensure they offer access to low- or no-cost virtual care, clinical programs for chronic conditions and wellness programs focused on obesity, tobacco use and other underlying health issues of costly conditions.
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