2020 Global Employee Benefit Trends

As we embark on a new decade, it’s impractical not to reflect on the one that just concluded. The employee benefits landscape evolved arguably more in the last 10 years than it ever has and yet, global spending on health care remains higher than general global inflation. Over the last decade, the consumer has become the center of the process, technology has changed almost every aspect of the market, wellness developed into well-being and the workforce evolved into more generations and became more mobile and fractured. As the new decade begins, employee benefit packages will be as critical as ever for companies that want to evolve and succeed. Meeting many of the challenges that lie ahead will require not only time and effort, but additional dollars allocated for enhancing the benefit program.

1. Continued Concern for Rising Prescription Drug Costs

Costs for prescription drugs have been on the rise for several years and they show no signs of slowing down. While much of this issue (and spotlight) is found in the U.S., it really is a global challenge. Worldwide, drug sales are projected to reach $1.18 trillion by 2024¹, which would result in compound growth of almost 7 percent. Further, spending is also rising because as new drugs are coming to market, they are doing so at much higher rates than a decade ago – and this applies to both brand and generic drugs. Managing the pharmacy plan will require employers to have an aggressive approach and constant supervision.

Potential Employer Strategies:

• Review all partnerships within the pharmaceutical chain to understand the revenue flow and ensure lowest costs are provided and the member experience is superior.
• Provide members with tools that allow them to shop for drugs to find a lower price.
• Evaluate claims data to find any trends in utilization, chronic conditions, plan and member cost sharing, rebates and provider prescribing patterns that can be positively impacted.
• Promote targeted specialty pharmacy management.

2. Mental Health

The issue of mental health is becoming a global epidemic. Approximately 450 million people worldwide have a mental health disorder and many people still do not seek treatment. These conditions cost businesses billions of dollars and impact not only the employee but their family and coworkers as well. Employers are positioned to help their workers address these issues and have great incentive to take the lead on addressing this growing concern.

Potential Employer Strategies:

• Build a workplace culture that supports mental health, eliminates stigmas and empowers employees to speak freely. Managers will need resources to address any mental health issues and to provide the right feedback at the right time.
• Promote the Employee Assistance Program (EAP) and consider re-branding it to promote greater usage and expand services offered to combat additional areas that lead to anxiety, depression and stress.
• Provide initiatives at the workplace such as classes/workshops on mindfulness and stress management to help foster a supportive environment.
• Review your claims data to see where potential gaps in care exist and where additional opportunities for support and engagement lie.

3. Addressing the Rising Obesity Issue

The number of people worldwide that are overweight or obese is continuing to rise (50 million more adults became obese between 2010 and 2016)². Individuals that are overweight typically utilize health care benefits more, and they have higher prevalence of diabetes, cardiovascular disease, hypertension, cancer and depression. Not only will this population negatively impact employer provided benefit plans, but workforce productivity and life expectancy will suffer as well. Companies need to ensure their culture does not run counter to its employees realizing and maintaining a healthy lifestyle.

Potential Employer Strategies:

• Promote and support physical activity at the workplace. Lack of physical activity remains a tremendous problem for many regions.
• Replace unhealthy food options in vending machines/cafeterias/office meetings with more healthy options.
• Increase the number of workplace wellness options and provide monetary incentives to increase participation. Weight management programs and nutrition classes should be made available. Health coaching and sleep programs can also provide a personalized experience.
• Review compensation practices to ensure certain roles or positions are not lagging. Those in lower income groups tend to have a higher prevalence of obesity.

4. Cost Shifting to Employees May Subside

As the cost of providing health care has continued to rise at an unsustainable rate, many employers and insurers have used plan design features (e.g. deductibles and coinsurance) and increased employee contributions to tamp down medical rate increases. What employers have learned the last couple of years is that they’re reaching the end of the runway on shifting costs on to the backs of their workforce and 2020 may be an inflection point. As the labor market remains competitive, employers recognize the need for a competitive benefits package and that removing as much of the financial burden as possible leads to a more productive workforce and improved business results.

Potential Employer Strategies:

• Education remains a critical tactic. Employees remain challenged on understanding their health, how to improve it and how to budget their health spending.  Providing communications that are tailored to the individual will also make an impact.
• Restructure plan designs to incentivize healthy behaviors and steer employees to select medical providers that provide the best in care and at lower-cost sites.
• Wherever possible, provide employees with access to virtual care. Many consumers enjoy this alternate experience and costs are lower than in a traditional doctor setting.

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¹Evaluate Pharma, World Preview 2019, Outlook to 2024.
https://www.evaluate.com/thought-leadership/pharma/evaluatepharma-world-preview-2019-outlook-2024

²OECD (2019), The Heavy Burden of Obesity: The Economics of Prevention, OECD Health Policy Studies, OECD Publishing, Paris.
https://doi.org/10.1787/67450d67-en