They gathered May 14 for IB’s first annual Health Care Summit to talk trends and cost control, and if there was one thing panelists agreed about, it’s that employer-sponsored health care will continue to evolve.
Held at the Madison Concourse Hotel and Governor’s Club, moderated by Dr. Frank Byrne, president emeritus of St. Mary’s Hospital, and broadcast live by WisconsinEye, the summit drew 140 people who got some welcome news about likely stabilization of the cost trend, which spiked to the 7% range after the COVID-19 pandemic. They also learned that health care isn’t necessarily expensive and that some employers have found ways to flatten the cost curve.
Cost Drivers
Panelist Brian Meyer, director of analytics and underwriting for M3 Insurance, which produces an annual cost trends report, noted elevated costs over the past two years. Whereas five years ago, employers saw annual increases in the 4.5 to 5.5% range with their health care premiums, they saw that cost trend start to tick up in 2023, when premiums rose upwards of 7% due to a variety of factors. Looking ahead to 2025, he and other panelists predicted costs will stabilize in the 6.5 to 7% range.
Meyer attributed the recent spike to higher pharmacy costs — specialty medications and the introduction of new medications to the market — higher care utilization post-COVID, more high-cost cancer claims, and health care inflation catching up to regular inflation. “Typically, health care inflation is going to lag regular inflation due to the multiyear contracts, and we’re seeing that come through now in 2024 and 2025, putting a bit more pressure on cost,” he explains, “but we know it’s not sustainable to have 7% increases year over year.”
As a result, employers are looking for ways to be more innovative in controlling their costs. Cheryl DeMars, retiring CEO of The Alliance, an organization of self-funded employers, added an aging population to the list of factors — with age comes higher health care utilization — but she pointed out that some employers experience a 0% increase, not just for one fluke year but year after year “because of some of the strategies they have put in place.”
According to DeMars, those strategies involve the use of data analytics to identify shoppable, schedulable care with physicians and hospitals that do a good job for less, and using benefit plan design to create financial incentives for employees to use those preferred providers. Noting the variance in cost for an MRI, which can range from $500 at alternative providers to $3,400 or higher with some health systems, DeMars said creating visibility in the cost variation, and then using plan design to create financial incentives for employees to select lower-cost services and continuously educating them about the availability of these resources, is having an immediate impact. “This isn’t five years away,” DeMars states. “To get people to use the $500 MRI instead of the $3,400 MRI, you save that money today.”
Some employers are using direct primary care (DPC) providers to control costs, while others bring primary care on-site to establish workplace-based care that can be delivered at lower cost. Another panelist, Dr. Nicole Hemkes, owner and medical director of Advocate MD, a DPC practice, predicted that alternatives such as direct primary care, on-site/near-site clinics, and large corporate models such as One Medical, will take hold as more venture capital and private equity firms invest in the health care market. Under DPC, patients pay a flat monthly fee for care and physicians try to address as many patient needs as possible in the clinic setting.
Hemkes, who also noted the disparity in MRI costs, says people erroneously equate health insurance with health care when they are different concepts, and she asserted that most health care isn’t actually expensive, especially when it’s taken out of the hospital setting and placed in an outpatient setting. “Ninety percent of health care is actually very affordable,” Hemkes stated. “There are expensive things in health care — immunotherapy, specialized surgery — but the vast majority of health care is very affordable.”
Picking up on that theme, Michael Barbouche, CEO of Forward Health Group, is trying to bring health plans and the health systems together and figure out ways to reduce hospitalization. “It would save us a lot of money and maybe we could figure out how to share the savings,” Barbouche explains. “The gateway to going to the hospital is the emergency department. If those [visits] go down, it would help us as well … We try to teach the hospitals and health systems that if we don’t have a hospitalization, we have a touchdown.”
For Moira Klos, chief people officer for WPS Health Solutions, one best practice — ongoing communication and education — doesn’t sound very exciting, but it can make a big difference and not just during open enrollment periods. Helping employees become savvy health care consumers is as simple as identifying the right, most cost-effective venue when it comes to a health care need, whether it’s telemedicine, in-person care, or urgent care. In 2023, she says WPS plan members were able to save themselves $25,000 and save the overall plan $90,000; however, had they used all the right settings that year, “we would have saved the employees over $150,000 and the plan over three quarters of a million dollars,” she stated.
Coming out of the pandemic, it was clear that “mental health is health,” Klos added. “We were able to increase our mental health care providers to 20,000 additional providers, and that’s not only for our employees, but also for our customers.” With more providers, wait times went from several weeks to 24 hours.
Distilling Data
Several panelists noted the challenge of taking reams of data, distilling it into information that really matters, and turning it into actionable intelligence on behalf of patients. Panelist Phil Lindemann, vice president of data and analytics informatics at Epic, told summit attendees that the electronic medical records company has tried to solve this problem with tools like Cosmos, which can help physicians pinpoint the best medication for a patient based on population health data. At the point of care, a doctor is able to review a patient’s labs, demographics, comorbidities, and data on similar patients to determine which medication had the lowest incidence of stroke.
“That’s the type of stuff that’s now possible, where every physician can learn what’s right for a patient just like you,” Lindemann explained. “That’s just coming out of the hopper.”
