We've made it to the highlight of our year: The official kick-off to benefits renewal season. (What, just us?)
But this time might be a little different. While we don't want to sound the alarm just yet, we need to speak up: We're expecting this renewal season to be a bit of a wild card.
We all watched as Covid brought the healthcare system to a screeching halt. Now, moving into 2022, the aftereffects of that crisis may impact the cost and ease of this upcoming renewal process, especially for smaller employers.
Sure, we can't tell the future. But short of a crystal ball, we've got the next best thing: data. When it comes to building benefits strategy for a smaller employer, data is your best friend. It can shine a light on what to expect in the future — both for your organization and in the broader healthcare system — and support your ability to advocate for your plan.
Read on for the four renewal season data points that have caused us to say, "hmm, this could be a problem."
Many employees chose not to access care during lockdowns, setting us up for a high claims year.
That's 44% of people who would have gotten care under different circumstances, but opted to wait. Here's the thing with medical conditions — the longer you wait to get it treated, the worse (and more expensive) the condition usually gets.
Take those 44% of formerly-backlogged employees who are now making appointments, and add them to all the other people who are accessing care normally, and you may be left with a huge increase in services rendered. That could mean big claims, big bills, and big utilization.
"Demand didn't decrease," says Walmart Health SVP (and Nava Advisor) Marcus Osborne. "In fact, demand has only increased. There aren't less people in the US with musculoskeletal issues. There aren't less people dealing with heart disease or a chronic illness. Demand is there — and when you add on all that deferral, with demand still increasing, what you now have is that people are saying there's going to be explosive demand."
Since insurance rate increases are usually calculated based on claims and utilization, this could add up to an expen$ive renewal for many.
Medical cost trends are on the rise again — and small employers may be hit hardest.
These projections account for multiple Covid-related disruptions to our medical system: from deferred care; to persisting virus testing, treatment, and vaccine costs; to an ongoing mental and behavioral health crisis; to general pandemic-era worsening of general population health.
Sure, this is slightly lower than the 7.0% increase in 2021. But this still signals a reversal in cost trends, which had been on the decline over the last decade.
But that single-digit increase in overall healthcare costs doesn't necessarily mean your renewal will also be that small. Keep in mind that that figure covers the healthcare system as a whole, including the rates of larger companies.
To put that in perspective, in 2020 larger employers saw the lowest annual health cost increases in over two decades, at 1.9%. Yet small employers saw increases of 6.9% — nearly 3x that of their larger peers.
According to Marcus, "We could be looking, over the next 12-24 months, at what could be the highest cost increases in the history of the healthcare sector."
After a year of deficits, providers may try to recoup funds.
This connection may not be quite clear at first — how does this impact your employer-provided healthcare?
Well, after losing out on so much cash last year, providers are looking for ways to make up for lost time... which could add up, both for your employees' bills and the employer-covered premiums.
"If you're a provider or a health system who took a major hit over the last 12-18 months," explains Marcus, "You're going to try to find a way to recoup those losses."
Providers are already building out their offerings to attract more patients (think telemedicine and other tech-driven solutions). With these new options, employees may want some help choosing the best path for their needs; try looking to healthcare navigation platforms like Rightway for help making sense of this shifting system.
If you're expanding your benefits, you're not the only one.
With the Great Resignation shaking up the labor market, employers are looking for any way to keep their employees engaged while attracting new talent. With 36% of the employees considering leaving their jobs in 2021 citing compensation and benefits as a primary cause, it's no wonder so many employers are pulling out all the stops to level up on benefits.
We won't lie, it is encouraging to see that so many employers clearly recognize the value that benefits provide in engagement, retention, and overall ROI. Maybe we're biased, but we think benefits can be a key driver to rebuilding stability (and attracting or retaining talent) post-pandemic — and the data backs this up. In a 2021 survey, 78% of employees said that their employer-provided healthcare coverage has an impact on their decision to remain with their employer.
But with so many employers flooding the market in search of new benefits, you may face some longer lead times from vendors. This also means that brokers may have their hands full with other clients in their book.
So whether you're planning on expanding your offering, or simply re-upping the same for another year, it's best to start renewal prep early.
Looking for more guidance on navigating COVID-19 in the workplace? Check out our blog for expert insights from our Nava Advisors.