Health care options and costs are once again a hot topic for many HR and benefits managers this year. Medical costs have been trending upward since 2017 and rose about 7% amid pandemic uncertainties in 2021. According to PwC’s annual healthcare report, employer health care costs are expected to rise 6.5% in 2022 due to the lingering effects and fallout from the COVID-19 pandemic. A recent article explored some of the “profound shifts” experienced by the healthcare industry during the pandemic that will continue to affect future costs and spending:

• The COVID-19 hangover will continue in 2022 as patients increase use of healthcare services. Many patients deferred preventive routine visits and screenings during the early parts of the pandemic and are returning to higher costs than in 2020.

• Pandemic hangover impacts also include worsening overall health as many Americans suffered from poor nutrition and lack of exercise as well as increased mental health and substance abuse issues.

• Healthcare providers have boosted spending to stockpile personal protective equipment (PPE) and prepare for future public health emergencies.

As the pandemic hangover continues to impact the way we do business and support workers, HR professionals will need to assess current healthcare costs and trends before making plans for 2022. With costs on the rise, it presents a great opportunity for businesses to redesign health plans, encourage employees to take advantage of preventive care, and promote healthier employee behaviors through wellness plans.

In this article, we’ll explore how COVID-19 continues to impact healthcare costs and how experts believe it will affect healthcare spending in 2022. We’ll examine ways to redesign benefits packages to lower healthcare costs and provide tips to optimize your benefits package to rein in costs and meet employee needs.

The COVID-19 hangover’s impact on healthcare costs in 2021

According to a February 2021 survey by the American Psychological Association, 42% of respondents said pandemic stress had brought about unwanted weight gain, with a median gain of 15 pounds and nearly one-quarter said they were drinking more alcohol to cope. These and many other health behavior warning signs are expected to cause an uptick on health care usage in 2021 and beyond.

Another lingering effect from the pandemic is that more people have become more comfortable with remote everything—from work and socializing to health care, also known as telehealth. Healthcare organizations have already begun to invest in better digital tools for patient engagement and care delivery which will cause healthcare costs to increase in the short term. However, many experts believe that the adoption of these virtual care tools and increasing usage of lower-cost sites like retail clinics have changed consumer expectations which will help drive lower spending in the future.

Opportunity for change

As the healthcare industry experiences disruption and costs continue to rise, some experts see opportunity for employers to redesign traditional health care plans and negotiate better prices. In a recent Fortune article, the authors describe this new chance for employers to control healthcare costs:

“As an alternative, instead of negotiating their own contracts with health care providers, coalitions of like-minded employers can relinquish traditional insurance carriers and collectively work with alternative “market-making” vendors who offer insurance plans centered on doctors and hospitals that meet cost and quality criteria. This approach telegraphs to providers and traditional health insurance carriers that prices are too high, and that employers are willing to take their business elsewhere.”  

Similarly, SHRM discusses the prospect of making modifications to benefits packages so that skyrocketing costs don’t become a barrier to care. For example, benefits managers can work to lower plan deductibles or provide employer funding to employee health savings accounts. It’s all about making health care more sustainable and equitable in the long run.

Making health care more equitable and inclusive

Another issue having an impact on health care and health care spending is the ongoing diversity, equity, and inclusion movement. According to one study, 56% of large employers noted they are working to identify health inequities in their benefits delivery. More than ever before, employers recognize the importance of a diverse and inclusive workforce and its connection to high levels of employee engagement, job performance, and retention.

According to Willis Towers Watson, the number of employers promoting diversity, equity, and inclusion (DEI) in both their workplaces and their benefits packages is expected to increase sharply over the next three years. In fact, about 70% of employers surveyed said they would promote DEI-related aspects of their benefit and wellness programs over the next three years.

Tips for your upcoming benefits selection and open enrollment 

As your business looks ahead to 2022, it’s important to plan for the lasting COVID-19 hangover effects including employee wellbeing and future healthcare spending trends. Additionally, it’s important to consider how your business will support diversity, equity, and inclusion in your workplace culture, policies, and benefits programs.

Consider these strategies to improve your benefits selection and open enrollment process:

1. Use a benefits broker. Benefits brokers can be valued consultants that provide knowledge and expertise about benefit trends, compliance, and building a benefits package that best meets the needs of your workforce.

2. Join a healthcare coalition. As discussed previously, a coalition is a new approach to plan design and focuses on ensuring health care is accessible and affordable. The coalition acts on behalf of business owners to work with plan providers and other stakeholders.

3. Educate your workforce. Once you’ve built a comprehensive benefits program, it’s important to effectively communicate all the details with your employees. Make sure they have the information they need to make the best enrollment choices, take advantage of wellness programs, and minimize costs.

Benefits selection, open enrollment, and compliance management are time-consuming tasks—but they’re also critical components to ensuring employee wellbeing and business success. Benefits administration tools and help from outsourced benefits brokers or healthcare coalitions help you gain control of information, programs, communication, and costs. Asure provides software and services that help businesses optimize benefits and control costs.