As healthcare costs rise, employers can arm themselves with data to target benefits

Healthcare is one of the largest expenses for U.S. households, averaging $12,900 per person a year. But with inflation having affected healthcare costs, many working Americans have experienced a growing gap in healthcare affordability, placing their quality of life at risk. By analyzing employee circumstances, however, employers — with the help of their benefit advisers —can offer more targeted benefits catering to employees' specific affordability needs. 

Although inflation has been cooling, it has forced Americans to make difficult trade-offs as they debate how to manage its impact on dwindling disposable income. Regarding healthcare, Americans may have to decide between groceries or medication, fuel or therapy, rent or a doctor's visit. Even among individuals with health insurance, 32% had healthcare access problems due to cost, which increased to 61% for those considered "functionally underinsured," according to the Commonwealth Fund. What this means is that they don't have available funds to cover basic out-of-pocket costs from deductibles, copays and coinsurance.

The economic disparity is especially present among minorities. While nearly half of Americans (49%) cannot pay $1,000 of unexpected medical bills within 30 days, the number rises to 69% among Black Americans and 63% of Hispanic Americans compared to 42% of white Americans. 

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Additionally, living in a disadvantaged area has been linked to higher rates of chronic diseases like diabetes, hypertension and asthma. Data from Aon suggests that employees in those areas often underutilize high-value services such as preventative care, mental health care and vaccinations. The industry is responding by making tools that measure the health disparity within an employer's workforce and can then recommends solutions to improve the health of employees who live in disadvantaged communities.

These tools can generate conversations among business leaders around tactics and solutions that help employers mitigate health equity and affordability challenges. It can also serve to address diversity, equity and inclusion (DEI) in the workforce, through employer census data, plan design information, healthcare premiums and employee contributions to model how these predictors affect employee populations. This in turn helps employers make better decisions that improve employee health status and lower medical plan costs for a diverse U.S. workforce. 

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Aon data found that among employee populations that experience affordability challenges (i.e., healthcare spend is more than 10% of income), 34.1% live in highly disadvantaged areas, 33.5% live in an area with a high shortage of primary care physicians and 56.7% live in areas with a steep shortage of mental health provider. Employees with low affordability also drive higher healthcare costs for employers, with annual costs that are $1,500 more than employees with medium affordability and $3,500 more than those with high affordability. 

Employers and their advisers realize that improving healthcare affordability for individuals is not only critical to managing these costs, but also to achieving key priorities such as attracting and retaining top talent, supporting workforce health and well-being, and advancing DEI objectives.