HR teams face no shortage of challenges, but
For a third year in a row, health benefit costs jumped past the decade-long average of 3% per year, with 2025 predicted to see a 5.8% increase in benefit costs per employee, according to consulting firm Mercer. Unsurprisingly, 53% of employers plan to
If you ask Brandon Weber, co-founder and CEO of benefits brokerage Nava Benefits, the first step is admitting there's a problem and that it's not going away.
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"You have to recognize that the definition of insanity is doing the same thing over and over again and hoping for different results," he says. "Decide that this is going to be the year that you explore different strategies for building a health plan."
Healthcare is a runaway train
Weber reminds benefits leaders that the U.S. healthcare system is not necessarily designed to serve consumers. Since insurers collect a percentage of the total premiums they charge, it's in their best interests for premiums to increase each year. Weber notes that large insurers need to spend at least 85% of the premium on medical care for the consumer, with the remaining 15% going towards administrative costs and profit. This is known as the medical loss ratio.
"Large insurers are not really incentivized to change the tide of the cost of coverage and the cost of procedures — if premiums go up by 100%, then that 15% goes up by 100% as well. The system as it's currently designed is a runaway train, and the deck is stacked in favor of larger than expected healthcare costs year over year," he says.
U.S. healthcare isn't only increasingly expensive, but the quality can sometimes be questionable, too. Consumers don't typically have the resources to find the best healthcare providers, like those with lower hospital readmission rates or doctors who perform less invasive surgeries.
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"Even within the same health system, individual doctors are practicing medicine in very different ways, and those are leading to very different costs associated with the type of care received," says Kirk Czonstka, senior vice president of strategic alliances at Garner Health, a healthcare benefits and analytics company. "The individual doctor is the one performing surgery or steering where the surgery is going to be performed. Those decisions drive a lot of costs across the U.S. healthcare system."
Ultimately, traditional health plans aren't designed to change the healthcare system as it stands. That's why Weber and Czonstka are challenging HR teams to look beyond the limits of their current benefits.
Don't be afraid of innovation
If HR teams are looking for better solutions, it may mean looking for better partners, says Weber. He asks that HR teams evaluate their benefits brokers and push them to find innovative solutions on the market; Weber warns HR leaders not to believe brokers who tell them their company is too small for better benefits.
"There are all these spiraling costs, it keeps getting worse and yet, there are all these amazing innovations out there," says Weber. "I'm reminded of a William Gibson quote, 'The future is already here – it's just not evenly distributed.'"
Weber points to an organization called ParetoHealth, which helps employers self-insure while also monitoring employee care utilization and intervening to ensure employees are getting the best care for the best price. Nava has connected small and midsized employers with ParetoHealth, allowing HR teams to build a new health plan entirely — and one that is primed to be conscious of costs and quality of care.
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If HR teams aren't interested in transitioning to self-funded health plans, there are still ways to strengthen their plans, underscores Czonstka. For example, Garner gathers data on healthcare providers across the country, highlighting those with the best health outcomes in their specialty. Garner can then create a specialty network of the best providers within the plan's existing network.
"You shouldn't have to change your carrier or your network. Let's just help surface who the best doctors are within the member's existing network," says Czonstka. "On average, we're getting [employees] to save 27% per episode of care when they use a doctor Garner has surfaced as a high-performing doctor in that network."
Weber, who has pointed employers in Garner's direction, adds that Nava can even build a plan that provides zero-dollar deductibles or co-pays for employees who use doctors in Garner's specialty network, adding more incentive for employees to seek the best care.
"If you use the best doctors, that results in far lower overall claims," says Weber. "Those doctors have fewer readmissions, they don't push you into expensive surgeries you don't need and they make the right recommendations for your health."
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HR teams may also need to consider helping employees choose their healthcare benefits. Weber recalls using Nava's app, which offers healthcare and open enrollment guidance to users (any employee whose employer uses Nava to build their benefits), to choose his family's new plan for 2025. Since Weber's family is welcoming a baby in February, it was crucial to pick the right plan. Nava ended up directing Weber to a plan he wasn't initially considering.
"I'm the CEO of a benefits brokerage, and my wife and I needed help," says Weber. "I was guided to what I now believe will be a better economic decision for one of the biggest spend items in the year."
Taking the reigns
Weber and Czonstka agree that HR is in a pivotal position. They can not only improve their health plans and mitigate the inevitable cost increases but also improve the well-being of their entire workforce.
"We can impact the quality of care delivered," says Czonstka. "That means people get back to work sooner, and they can be more productive and ultimately avoid the higher cost type of care that drives employer spend."
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Weber reminds HR teams that while it's stressful for healthcare benefits to fall on their overworked shoulders, it means they do have the power to change healthcare for the better, at least for their workers.
"It's absolutely imperative to figure out how to change the trajectory of the cost of healthcare for your business — and the good news is that the HR team owns that," says Weber. "You can lower the cost of your overall healthcare spend, while also telling your employees you've got a better benefit for them."
