Addressing variations in employer health care costs across the U.S.
Discover strategies to help employers manage health care costs, no matter where their employees live.
Health care costs can vary greatly depending where an employee lives. In fact, UnitedHealthcare data revealed that per member per month (PMPM) costs were 2.7x higher in the highest-cost states compared to the lowest-cost states.1
Why? A variety of factors can impact these costs, including:
- The availability, cost and quality of providers and sites of care within a given area
- The prevalence of conditions that may be more common within certain states
- The disparities or social drivers of health (SDOH) that may exist within different population groups
|In other words, these PMPM cost variations are a result of factors that employers can’t control. However, understanding the discrepancies in costs across the country may help inform strategies about how to manage costs, no matter where employers’ workforces reside, whether in one state or many.
3 strategies employers can take to help manage cost variation and reduce health care costs
1. Understand the challenges faced by certain employee populations
It’s important for employers to understand the geographic makeup of their workforce to better understand why some employee populations account for a larger portion of their cost of care. To do this, employers can use available data to see how different pockets of the nation may be disproportionately impacted by specific health challenges compared to others.
For instance, reports produced by America’s Health Rankings provide in-depth, state-by-state analyses of health strengths and challenges. These insights may reveal why different employee groups drive a higher cost of care.
Employers can also work with their carrier and broker or consultant to get a better understanding based on their specific employee population. Evaluating an employer’s unique health plan performance data may identify gaps in care and provide guidance to better tailor strategies that can help manage costs.
2. Choose a network design that meets employees where they are
Once employers understand what’s impacting their cost of care, they can select a health plan and network design that enables their employees to access more affordable care.
A broad network may appeal more to employers with geographically diverse workforces because it can provide employees with closer, lower-cost provider options compared to networks with less flexibility and choice.
High-value networks offer coverage that is concentrated to a select pool of quality providers and facilities. For example, networks that require or encourage employees to establish a relationship with a primary care provider (PCP) may help ensure they receive the most cost-effective care.
Pairing a network with a health plan that provides more upfront cost information may also help employees make more financially informed decisions when seeking care.
3. Educate employees about cost management tools and resources
Encouraging health plan literacy is another way employers can support employees in making more cost-effective care decisions. Especially for self-funded employers, educating employees about the impact their decisions can have on the cost of care may help lower their overall cost trend.
Employers can explain how employees have a variety of choices when it comes to site of care and that there are cost implications for each. This may help employees better understand when to schedule a virtual visit versus when to make a trip to urgent care or the emergency room.
Ensuring employees are aware of the cost management tools provided by their carrier and care provider may help them make educated decisions based on their care needs. These resources can include:
- Digital tools to help employees navigate the health system
- Transparency tools that compare the cost of different providers, procedures and medications
- Customer service representatives or advocates who deliver compassionate support, personalized care recommendations and solutions to help employees manage unexpected or out-of-network costs
Ongoing health benefits education may also boost engagement and lead employees to make decisions that lower the cost of care for them, their families and their employers.
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