Are Employers the Real Disruptors of Healthcare?
It goes without saying that employers have a stake in lowering healthcare costs.
According to a report from Mercer which surveyed over 1,500 employers, the average total cost of health benefits per employee will rise by 3.9% in 2020. That stat is concerning when connected to Kaiser’s 2019 Employer Health Benefits Survey, which indicated that employee premiums (for a family plan) exceeded $20,000 for the first time. The average premium for family coverage has increased by over 20% in the last five years.
Mercer couches its results with an explanation that cost shifting may not be as significant of a factor as it was in prior years. The report cites less than half (43%) of respondents planned to raise deductibles or cut benefits to control costs. That number could be reflective of the 2019 Milliman Medical Index results, which found that healthcare costs are increasing, but at a slower rate. That Index also showed employer costs increasing at a greater rate than employee costs.
With arguably the most purchasing power in the healthcare system, employers are a good barometer to understand which creative strategies stakeholders can deploy to lower costs. As the backbone of the U.S. healthcare system, the employer-sponsored market cannot afford to shoulder any more of the costs than it already does. So what can employers do about it?
Telehealth meets in-home care
Amazon has taken about every step possible to insert itself into the healthcare ecosystem in some way (medical devices, HIPAA-compliant voice technology, the employer-led venture, Haven – just to name a few). Its latest pilot, Amazon Care, is a virtual primary care clinic (for Seattle-based employees) with the ability to receive in-person visits by nurses in the home.
Using the home as the center of care—with the support of new technology—is an increasingly popular idea. When it comes to chronic conditions, which are major cost contributors for employers, studies have shown that monitoring patients in their homes affords earlier intervention and more personalized therapies. In turn, hospitalization, ER visits and other financially burdensome treatments are reduced.
CMS even recently signed off on the first digital health reimbursement plan, encouraging providers to use remote monitoring and telehealth services. If tele-monitoring became a ubiquitous practice, the healthcare industry could see savings upward of $60 billion per year.
There are skeptics who think telehealth isn’t a proven solution yet, even though the take-up rate increases among patients every year. The CBO recently shared that there’s no consensus if telemedicine increases or decreases spending.
For Amazon, this clinic affords the opportunity to test new healthcare solutions before releasing them to the public. Testing technology and products internally for R&D purposes first presents two simultaneous opportunities for Amazon: to affect its healthcare spend and to offer its own solution to the market.
Its decision to launch Amazon Care could foreshadow potential future moves from Haven (Amazon, Berkshire Hathaway and JP Morgan Case). It also suggests that Amazon believes incremental changes—like adopting solutions already available to the market—are a worthwhile approach to better preventive care.
The worksite clinic
The tech giant’s efforts fall in line with a recent survey by the National Business Group on Health, which found that employers are increasingly focused on preventive care as a method to combat rising costs. Thirty-four percent of the employers surveyed said primary care will be available on or near the worksite in 2020.
Walmart has flipped that idea to face externally, targeting its customer base by expanding its retail concept to cover healthcare.
“Walmart Heath” is an in-store clinic located in Georgia offering medical, dental, vision and mental healthcare. Its pricing list is public and staff are trained medics specializing in everything from radiology to counseling, seemingly addressing cost, access and comprehensiveness of care.
The venture positions Walmart as the new middleman between consumers and providers. It also questions the role of insurance. The big box chain will accept most major plans, but its pricing will allow customers to pay out-of-pocket because the price you see is the price you pay.
Walmart’s Sam’s Club is piloting a similar initiative in select stores. Customers will have the ability to purchase healthcare services like they would any other item at Sam’s Club. Dental care, generic prescriptions and telemedicine are offered at a discounted price. Each type of bundled discount allows members to use prepaid health debit cards with in-network providers. The company has been careful to distinguish this offering as a discount health program to supplement coverage rather than an actual insurance plan.
Both Amazon and Walmart have launched a telehealth-related initiative among other solutions to emphasize preventive care and encourage consumers to supplement their benefits with lower cost alternatives. It’s too early to tell if these pilots take off, but it does depict a shift in how these retail giants wish to be seen by their employees and their customers—not just as payers but as purveyors of health services.