Health Benefits Still Far From a Steady State

Health Benefits Still Far From a Steady State

Our Thinking / Healthcare /

Health Benefits Still Far From a Steady State
Calendar02 January 2015

Since the ACA’s passage nearly five years ago, employer-sponsored health benefits have been undergoing constant change and the “new normal” is not yet in clear sight. This is true for nearly every link on the health care value chain: providers, payers, health plans, consultants, and brokers. Our sister company, management consultant Oliver Wyman, recently published a report that describes the rapid and fundamental changes occurring in the health care industry, which of course will affect employers as well.

What may seem like an effective strategy for employers today can be quickly overcome by events. In speaking with clients, I’ve noted two implications of the pace of change. First, companies of all sizes and in all industries are keeping their options open and their eyes trained on marketplace trends. They are more interested than ever in peer-to-peer networking and are looking for help from advisers with both deep technical expertise and a broad strategic perspective.

One emerging innovation that employers are watching closely is the private health benefit exchange, which will be part of evolutionary change in some organizations or a revolutionary step for others. While only 3% of employers are estimated to be using private exchanges such as the Mercer Marketplace now, 31% believe it’s likely they will be using an exchange within the next five years.

A second notable trend is that the process of setting benefits strategy is no longer confined to the HR function. Decision-makers now include other members of the C-Suite and boards of directors. Stakeholder management and education is an increasingly important skill set, as the owners of benefit plans aim to have their internal strategies keep pace with the external environment.

This will require “a strategy for the strategy” as they lay the groundwork for ongoing conversation with critical stakeholders about the available strategic levers and the circumstances under which they would execute various options. In an environment that is inherently complex, ambiguous, and uncertain, the key to success will reside in simplicity, clarity, and insight.

The backdrop to all this activity is employers’ deep commitment to providing health coverage to employees. Mercer’s latest survey of US health plans found that fewer employers than ever are seriously thinking about scrapping their health benefit offerings and steering employees to the public exchanges. Instead, they’re carefully considering their options and embracing innovation.

Mercer has assembled a panel of experts to reflect on key health care reform developments and share their expectations for the future. Jim McNary is a senior partner with Mercer who serves as the North America Region Business Leader for Health & Benefits.

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