2023 Benefits Trends
The evolving workplace
2023 Bene昀椀ts Trends: The evolving workplace MarshMMA.com
Talent acquisition and retention will weigh heavier on the evaluation of bene昀椀ts solutions in the years to come. Contents 01 ESG thought leadership 03 02 Trend 1: Shifting workplace expectations 09 03 Trend 2: Mental and behavioral health needs 34 04 Trend 3: Changes in health care economics 55 05 Legislative 76 06 Sources 86 2023 Benefits Trends: The evolving workplace 1
The employee health & bene昀椀ts trends of 2023 Shifting workforce 1 expectations Tomorrow’s • Employees are placing a higher premium on 昀椀nding meaning and purpose at work. workforce is • Organizations struggle with moving their diversity, equity, looking for and inclusion (DEI) programs beyond building awareness to more than a creating real action. bene昀椀ts plan. • Empathy is key to solving the challenges employers face with Marsh McLennan Agency apathy and attrition among their employees. (MMA) o昀昀ers a variety of solutions to support the needs of your people, Mental and your team, and your business. We specialize 2 behavioral health needs in helping middle-market organizations — whether • The workforce continues to expect more from their employee self-funded or fully insured — 昀椀nd ways to experience, as it relates to well-being bene昀椀ts. provide their employees • Building 昀氀exibility into the workplace creates new opportunities for employers and employees. with bene昀椀ts they can take advantage of. • Mental and behavioral health support will dominate in While predicting and employers’ o昀昀erings in the coming years. responding to employee bene昀椀t trends and employee expectations Changes in can be di昀케cult, MMA is here to help make 3 health care economics it easier. We o昀昀er a number of solutions that • U.S. employers can expect health bene昀椀ts cost per employee help you stay in touch to increase to 7%. with your employees and • High-cost prescription drugs are a source of frustration, streamline how you o昀昀er especially with cell and gene therapies that cost millions. the bene昀椀ts they need. • High-cost claimants, utilization increases, and employment trends will keep health care costs higher overall. 2023 Benefits Trends: The evolving workplace 2
Environmental, social, and governance impacts 2023 Benefits Trends: The evolving workplace 3
What is ESG? The initialism ESG stands for the environmental, consumers, and employees demand more social, and governance impacts of an organization. sustainable and equitable business practices. These three key dimensions are how corporate By measuring themes like community and sustainability and ethics are evaluated as well as a social vitality, health and well-being, dignity and lens for investing based on policies to encourage equality, climate change, and risk and opportunity companies to act more responsibly. oversight, ESG strategies are moving toward the ESG strategies are becoming increasingly important center of corporate decision-making. This enables for organizations and leadership teams, regardless both internal and external stakeholders to create of size, annual revenue, or industry. transparency around the metrics of business impact that historically hasn’t shown up in earnings ESG can also be a way for organizations to future- calls and bene昀椀ts conversations. proof their companies as global regulations, 2023 Benefits Trends: The evolving workplace 4
Let’s look at the S, in ESG, as a workforce strategy. The social component of ESG is more important than trades to knowledge workers, covers all the ways companies ever. External pressures more than a paycheck are interact with their employees from investors to employee seeing big gains in productivity and the communities in experience demands and and overall satisfaction. Plus, which they operate. In other talent retention to facilitating ESG performance will become words, it is how a company thought leadership are taking increasingly important in treats and values people. center stage in strategic attracting and retaining For example, what are workforce conversations. talent as millennials and Gen the organization’s labor As the world reopens post- Z come to make up most management policies? Is it pandemic and o昀케ces go back of the global workforce. committed to product safety to full or part-time, and as and quality? What impact does leadership responsibilities and it have on the communities accountabilities grow, it’s time where it operates—are the for companies to lean into social e昀昀ects bene昀椀cial or adverse impact. Work continues to be to the local community? Do one of the places we spend most 14% its suppliers adhere to high of our time, and employees labor standards as well? are looking for connection and Today, creating a purpose- meaning in more ways and of companies with higher driven culture and establishing in more of their day-to-day ESG scores report higher activities. Companies that give 1 a purpose-driven business their employees, from skilled employee satisfaction. 2023 Benefits Trends: The evolving workplace 5
Baby 5% Boomers 15% Born 1946-64 23% Gen X 32% Born 1965-80 72% of the global 35% workforce will consist of Millennials 1 23% and Gen Zs of the global workforce1 Millennials 38% Born 1981-96 37% Gen Z Born 1997-2012 14% in 10 years’ time 2019 2029 2023 Benefits Trends: The evolving workplace 6
Perceived impact 1 of environmental risks Even with a global recession looming, where the unemployment numbers are bound to go up, a company’s ability to understand employee sentiment around purpose and impact should remain a top priority. It is no longer a nice to have, but a must-have to combat attrition and turnover. Youth Business & societal leaders 4.4 4.4 4.3 4.3 4.25 4.2 4 3.9 3.9 3.8 3.75 3.7 Average score across all risk types on a 1-5 scale 3.47 Biodiversity Climate Extreme Human-made Natural 3.25 loss action weather environmental disasters failure disasters 2023 Benefits Trends: The evolving workplace 7
7.5 Leading employers make greater 6.3 e昀昀orts than their peers to +50% +26% understand 5 employee 1 sentiment. The trends are clear, companies that best satisfy and attract talent rate higher in ESG performance than their peers. This is the main reason why ESG strategies will remain a priority for many employees when it comes to where they will choose to work. It is also why employers will continue to center these conversations when discussing how to attract, retain, and sustain talent. It is clear that ESG performance will function increasingly as a competitive advantage for those companies that integrate these metrics into their overall business performance and operational strategies. Top employers Top employers Global average by attractiveness by employee employers to students satisfaction and young professionals 2023 Benefits Trends: The evolving workplace 8
Shifting workplace END expectations R The shifting expectations T 1 regarding meaningful support of today’s workplace and workforce 2023 Benefits Trends: The evolving workplace 9
Talent retention and recruitment are becoming a persistent concern for businesses, as they struggle to adapt and adopt practices that re昀氀ect what people really want out of work. We are seeing a massive shift in what it means and where they spend their time and money. While will mean to be an employer, driven by expanding increased pay is a top priority for many employees employee demands. Attitudinal and behavioral data and a top solution for businesses to remain has signaled these shifts for years, but as economic competitive, higher wages are far from a silver volatility and a global recession looms large bullet. Companies don’t understand the realities employers must deploy new strategies. Employees their employees are facing, despite their best have continued to ask more from leaders and e昀昀orts and are making ine昀昀ective moves based on 1 businesses when it comes to their impact on faulty assumptions. To that end, organizations that individuals, the communities they serve, and the fail to reinvent their approach to both attracting planet we all call home. and retaining talent are risking turnover, vacant With real pressures increasing for working families, positions, and lost opportunities that negatively impact their bottom line. they must continue to make tradeo昀昀s between 2023 Benefits Trends: The evolving workplace 10
50% are reconsidering the work they do because of the pandemic2 3 × more than other generations, Millennials are reevaluating work.2 2023 Benefits Trends: The evolving workplace 11
Employees are placing a higher premium on 昀椀nding meaning and purpose within their work. One thing is certain after big and small, is continuing su昀昀ering through the pandemic: to radiate across work and many are still grieving—grieving personal lives.1 Leaders need the loss of loved ones, of to bring the mourning process routines and the familiar, of forward in their internal cultures missed connections, co昀昀ees, to support employees as well as ²⁄3 and gatherings, canceled recognize and acknowledge that are reconsidering the vacations and postponed rituals, people are not going back to the including the loss of going into old ways of working. work they do because 2 an o昀케ce every day. Loss, both of the pandemic 2023 Benefits Trends: The evolving workplace 12
People who live their purpose at work are more productive than people who don’t. They are also healthier, more resilient, and more likely to stay at the company. Moreover, when employees feel that their purpose is aligned with the organization’s purpose, the bene昀椀ts expand to include stronger employee engagement, heightened loyalty, and a greater willingness to recommend the company to others. 2 –McKinsey 2023 Benefits Trends: The evolving workplace 13
Top reasons Low pay 63 37 26 why U.S. No workers left advancement 63 33 30 opportunities a job in 2021: Felt Low pay, no disrespected 57 35 21 advancement 3 Childcare 48 24 24 opportunities. issues* They want, and to some degree need, a renewed and revised sense of purpose Scheduling 45 24 21 inflexibility in their work. They want social and interpersonal connections with their colleagues and managers. While that may seem like a tall order, showing up Poor 43 23 20 with empathy and compassion are two benefits** things leaders and management can do right now to help. While the pandemic may appear smaller in the rearview 35 22 13 mirror, the grieving process is a long Relocation and arduous one—one that businesses of every size need to continue to grapple with as employees continue to look for meaning in new and di昀昀erent ways. Too many 39 20 19 hours A clear shared identity is one way to make it easier for groups of employees to see their roles through a wider aperture. Historically, mission, vision, Too few 30 16 14 and values have remained static, hours resigned to the hallways of leadership, shareholder and investor conversations. Today, these need to be action- COVID-19 18 8 10 oriented, understood and supported vaccine requirement by every employee at every level, and operationalized in the day-to-day in order to deliver purpose at work. Net Major reason Minor reason *Among those with **Question provided health Note: Figures may children younger than 18 insurance and paid time not add to subtotals living in the household. off as examples. due to rounding. 2023 Benefits Trends: The evolving workplace 14
Mid-market companies, with leaner operating leadership models and narrower focus, can often articulate and live their purpose with greater ease and more authenticity. By promoting their purpose externally, and living being part of a bigger picture. This also creates their purpose across the business, mid-market teams that proactively and autonomously pursue companies are enhancing the employer value opportunities, from engaging customers, to proposition for candidates seeking to join purpose- breaking into new markets. If the past 18 months 5 driven organizations. have taught people anything, it’s that employees Rather than feeling constrained to the activities crave investment in the human aspects of work. They want, now more than ever, their jobs to bring de昀椀ned for them, employees want to help a signi昀椀cant sense of meaning to their lives and are de昀椀ne their own work through adding value to willing to make moves to get it. Employers need society and contributing to the purpose of an to create strategies and initiatives that help them organization. When done right, this kind of work meet this need, or be prepared to lose talent to creates connection, belonging, and a role in those that will. 2023 Benefits Trends: The evolving workplace 15
What the What the company world needs is uniquely good at 4 Purpose What people How the at the company can company are create passionate economic value about While it may feel burdensome, paying attention to purpose is an opportunity to meet employees where they are at. Additional support is easier to provide when employees feel like they have something to rally around, something bigger than themselves and their day-to-day activities. Treating employees more like clients must be considered and leaders who build a strong connection that is rooted in both the business and their humanity can have a huge impact. 2023 Benefits Trends: The evolving workplace 16
Anthony Perillo, Ph.D. @ADPerillo Hon, is everything ok? You’ve barely touched your 2020 DEI initiative. 2023 Benefits Trends: The evolving workplace 17
Organizations continue to struggle with moving DEI programs beyond building awareness to creating real and sustainable action. There was no increase in organizations with a aspects of improving the employee experience 6 DEI strategy from 2021 to 2022. Establishing, across the board. connecting, and integrating DEI initiatives remains According to Bene昀椀tsPRO, some key reasons for a signi昀椀cant challenge for many organizations and we are seeing many of the currently pledged the downshift in e昀昀ort and focus are, “failure initiatives not live up to expectations. Only 42% of to explicitly connect DEI objectives to the organizations have leadership that is committed organization’s mission, vision and values; lack of to modeling inclusive behavior and championing sustainable support from leadership; and absence of a cohesive strategic approach to integrating DEI DEI initiatives. This is actually down 昀椀ve percentage 7 points from 2021, and yet diversity, equity, and into all aspects of the business.” inclusion work remains one of the most important 2023 Benefits Trends: The evolving workplace 18
Two years after companies made very public commitments to advancing racial equity, we’ve seen some progress — but more is needed. The engagement of the $18 trillion+ private sector and continued investment in meaningful action by corporate leaders are critical to helping our society reach equity for all. –Ashley Marchand Orme, Director of Corporate Equity at JUST Capital 2023 Benefits Trends: The evolving workplace 19
Overall there is a lack of long-term strategic planning and integration as well as accountability. Businesses are prioritizing diversity without 51% of employees who recently quit their job cited putting equitable and inclusive structures in a lack of belonging at work as a critical reason place to actually support a diverse work culture. for leaving. Employees from underrepresented 9 Often, organizations place their DEI initiatives as identities were even more likely to cite this reason. a function of HR and do not pull programming So while we know that employees who feel included through to all aspects of their organization and are nearly three times more likely to feel excited day-to-day operations. It is important to mention by and committed to their organizations, the e昀昀ort another indicator for lack of success comes from put forward doesn’t match the data. poor training and delivery of shifting systems or Companies in the top quartile for ethnic/cultural policies and inauthentic and opaque conversations diversity on executive teams were 35% more likely at every level, not simply the C-Suite. Companies must also reconsider their recruitment partners to have industry-leading pro昀椀tability. On the 昀氀ip 8 side, companies in the bottom quartile for both and channels. gender and ethnic/cultural diversity were 29% Also, the lack of DEI success means employees less likely to achieve above-average pro昀椀tability are impacted in very direct and personal ways, than were all other companies in our data set. The 10 contributing to both attrition and resignations. bottom line implications cannot be ignored. 2023 Benefits Trends: The evolving workplace 20
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A Workhuman report expanded on the many bene昀椀ts that result when employees feel they are included, accepted, and belong at work. Among them: Higher employee Reduced stress engagement and productivity and better health Reduced con昀氀ict and Increased resilience improved relationships and trust Higher levels of learning Greater e昀昀ective and performance commitment10 2023 Benefits Trends: The evolving workplace 21
38% report having a formal DEI 6 strategy — the same as 2021. 51% of employees who recently quit their job cited a lack of belonging at work as a critical reason for leaving. Employees from underrepresented identities were 9 even more likely to cite this reason. 2023 Benefits Trends: The evolving workplace 22
We often think of employees like patients, that when they walk out the door of an o昀케ce they become someone else. But the truth is we are human in every role we play including the ones we take on at work. Each person has their own story and is accompanied by di昀昀erent needs. But the one thing we all share in common is the need for connection, which doesn’t shut o昀昀 when we log on or get to our desk. This reality is di昀케cult for employers to acknowledge, respond to, and create sustainable solutions that solve the problem. However, letting this work fall to the wayside will open employers across every industry to attrition and apathy. The key to what’s next is to listen to what people need and 昀椀nd a way to support it in any and every way possible. 2023 Benefits Trends: The evolving workplace 23
An inclusive culture is increasingly a competitive advantage for organizations in attracting and retaining top talent. increased likelihood of employees staying 47%with an organization if it’s inclusive increased likelihood of employees going out of their way to help a colleague if 90%they work in an inclusive organization increased likelihood of employees saying their organization is high- 7 performing if it’s inclusive × 2023 Benefits Trends: The evolving workplace 24
Tools that support making accountability more concrete are growing in their availability. When something intangible becomes measurable, it can be managed and made publicly available. In order to get DEI right, creating metrics that connect to both leadership and revenue goals is key. For any company to successfully engage and implement diversity, equity, and inclusion strategies they must go beyond platitudes and truly engage in a process that will not only get the most out of the increasingly diverse American workforce, but give them real and sustainable change. 2023 Benefits Trends: The evolving workplace 25
Empathy is the key to solving the myriad of challenges employers face when it comes to the modern workforce. Every company and every team has its own unique practices. It doesn’t take much to 昀椀nd social needs. People are asking for a greater employee media accounts promoting rest over productivity, experience overall—one based on empathy and connection over capitalism, and musings about the truly built with their needs in mind, which requires fact that they have no dream job because “they’ve organizational understanding. Many companies never dreamed of labor.” It is hard to deny that today report they do not have this. more and more people of working age are rejecting As the great resignation becomes the sustained the idea of climbing the ladder and embracing a resignation, and continues to impact women and di昀昀erent relationship to their work. Another term low wage workers at a higher rate across the board, that has come to the forefront, the great attrition, we are seeing businesses struggle across industries is widespread and likely to persist if not accelerate in the foreseeable future. to “maintain business as usual” mentalities and 2023 Benefits Trends: The evolving workplace 26
50% of the U.S. workforce are “Quiet Quitters” or those de昀椀ned as people who do the minimum required and are psychologically 10 detached from their job. 2023 Benefits Trends: The evolving workplace 27
Employers do not fully understand 11 why employees are leaving. When employees are disengaged, people grow Companies that prioritize employees and culture tired of going above and beyond for organizations have signi昀椀cantly lower turnover rates. Patagonia, that don’t reciprocate the dedication. for example, a company that has been known People are taking their re-evaluation of work very for its clear purpose and loyalty to its employees 13 seriously and therefore this type of work cannot beyond 昀椀nancial gain—has a 4% turnover rate. be understated. According to the Bureau of Labor Empathy is a necessity for companies who are Statistics, the average turnover rate is 57.3% when looking to not only survive but thrive into the most industries expected to be at around 17%. 22nd century. 2 Valued by Valued by manager Sense of organization belonging Work-life balance 1 Trusting Advancement Unmanageable Inadequate & caring potential workload compensation teammates Family Looking for Flexible Engaging care Poor a better job schedule work health yees Negative 0 Emplo interactions Remote Development work opportunity Meaningful Autonomy Poached by work at work competitor -1 Technology access More important Safe to Employees environment Desirable More important to living Starting a Employers location business -2 -2 -1 0 1 2 Employers 2023 Benefits Trends: The evolving workplace 28
In a world where money is no longer the primary motivating factor for employees, focusing on the employee experience is the most promising competitive advantage that organizations can create. –Jacob Morgan, author of The Employee Experience Advantage 2023 Benefits Trends: The evolving workplace 29
Creating a truly empathetic work culture requires time and support from people, structure, and processes. By taking small steps every day, leaders and managers can foster deeper connection and understanding. Practicing empathy is a simple gesture that can create the high productivity culture needed to thrive in the post-pandemic era. 2023 Benefits Trends: The evolving workplace 30
Since the start of 2020, empathy has been one of the most critical leadership skills, and has only been underlined in its importance in the light of the sustained resignation and the 昀椀ght for talent. For the 昀椀rst time across the board, empathy is not only expected of leaders and their workplaces but is demanded. Therefore, focusing on well-being and the now infamous work/life balance is a starting place, one where employers can make progress 昀椀rst. 2023 Benefits Trends: The evolving workplace 31
Empathy-centered conversations will fall to managers and supervisors. Those who are closest to the employees and who can help reduce disengagement and burnout if taught to have conversations in this way. Managers must learn how to have conversations to help employees reduce disengagement and burnout. One-to-one and weekly check-ins are a key tool that leaders should use to get ahead of issues and elevate needs. 2023 Benefits Trends: The evolving workplace 32
Manage shifting expectations One-size-昀椀ts-all bene昀椀ts programs can If you’re struggling with where to begin tend to overlook your organization’s in crafting engaging messages your diversity. O昀昀ering a broad range of employees will want to read, our Well- health and voluntary bene昀椀ts is a great being Communications Toolkit is a great way to demonstrate compassion and place to start. You’ll 昀椀nd strategies and empathy, and provide unique and tips on how to positively and e昀昀ectively thoughtful support for your employees connect with your employees. and their families. MMA can help you Of course, communicating with your determine straightforward, cost-e昀昀ective employees is only part of o昀昀ering a great ways to o昀昀er your employees the bene昀椀ts program—ensuring that you’re bene昀椀ts they need. o昀昀ering in-demand bene昀椀ts is another. Managing shifting employee expectations We advise employers to strive to create is a twofold endeavor: consistently a supportive, caring workplace culture communicating with your employees where employees can thrive through and ensuring you’re o昀昀ering the bene昀椀ts a multifaceted approach that supports they’re looking for. employees as individuals rather than as Our iNGAGED app is a customizable a unit. In working with MMA, you will mobile employee communications get helpful and e昀昀ective resources—all app—and a great way for you to meet delivered with a personalized touch. your people where they are. iNGAGED is designed for HR professionals to get the right message to the right employee. 2023 Benefits Trends: The evolving workplace 33
Mental and behavioral END health needs R The expanding needs of today’s T 2 workforce concerning well-being, mental, and behavioral health 2023 Benefits Trends: The evolving workplace 34
Prioritizing well-being in policies and bene昀椀ts is critical to developing the workplace resilience employers are seeking. By 2040, it’s expected that 60% of health care Reducing stigma remains a central priority for spending will go toward improving health and employers. Programs are being designed with well-being and it’s for good reason. While the an eye on increasing employees’ knowledge of pandemic’s impact isn’t as acute today, it has mental and behavioral health disorders to create created and compounded the problem with an accepting work environment and encouraging diagnoses of mental illnesses signi昀椀cantly employees in need to seek out help. Bene昀椀ts that increasing year over year since 2020. Shifting prioritize well-being are going to remain a critical the emphasis from a singular focus on physical aspect of attracting and retaining employees health, companies are rede昀椀ning their approach in 2022 and beyond. Addressing employees’ to wellness by prioritizing mental health as an emotional health and well-being will be core to essential element of total well-being. In fact, 90% building workplace resilience. of the nation’s $4.1 trillion in annual health care expenditures are for people with chronic and 1 mental health conditions. 2023 Benefits Trends: The evolving workplace 35
The workforce continues to expect more from their employee experience, especially as it relates to holistic well-being. Today, employee well-being has expanded beyond the-box wellness programs and perks to retain the physical and mental aspect of health care, their best talent and attract the employees who are broadening its focus to building a culture of holistic now searching for something better. wellness including physical, emotional, 昀椀nancial, Gallup recently asked employees what they look social, career, community, and purpose. Workers for most in an employer. The data showed that are leaving for workplaces that align with their personal belief system and show an authentic employees of all generations rank “the organization concern for individual employee well-being. With cares about employees’ wellbeing” in their top record-high resignations and a labor shortage three criteria. For Millennials and Gen Z, it’s their 2 impacting multiple industries, some leaders now no. 1 workplace want. realize that they need to provide more than check- 2023 Benefits Trends: The evolving workplace 36
What people What kinds of things want companies are o昀昀ering Physical Tools to prioritize • Hybrid work • Diverse health and take care environments bene昀椀ts of their unique • Fitness • Enhanced bodies and membership employee lifestyles assistance Emotional Normalized • Forced • Paid parental reminders that time o昀昀 leave it’s ok to take • Mental • Reproductive care of your health days coverage mental health Financial The ability to • Financial • Retirement expand their counseling planning 昀椀nancial growth • Personal and thus their investment progression in fund the world Social Opportunities • Paid volunteer • Peer to connect with time acknowledgment groups and • Company programs teams, engaging retreats in meaningful activity Support and • Business • Enhanced space to grow coaching learning and as both a • Tuition • Development professional assistance programs and a human in the world The ability to be a whole healthy person at work is growing in importance. Much like DEI, if it remains lip service, employees will leave for companies that have repositioned themselves as partners in health—speci昀椀cally, as it relates to meeting a holistic set of needs when it comes to overall health and well-being. 2023 Benefits Trends: The evolving workplace 37
67% of employers plan to o昀昀er enhanced employee assistance programs in 2023. 15% plan to make behavioral health care 3 more a昀昀ordable. 2023 Benefits Trends: The evolving workplace 38
Well-being, also known as whole person bene昀椀ts, are going to continue to remain at the top of employees’ lists of wants. However, they are far from the only demand employees are making in 2022. Better de昀椀ning and integrating what 昀氀exibility can look like is another key issue employers must continue to consider. The ability for employees to determine how they spend their time is now considered equal to bene昀椀ts like wage increases to a growing number of the workforce. 2023 Benefits Trends: The evolving workplace 39
Employees who have thriving relationships with their immediate team members have better well-being than those with poor relationships. They also work with higher productivity and are less likely to change employers in the year ahead. Social capital, and knowing how to build it, will be crucial for organizational success, and it is yet another way the employee experience directly connects to the bottom line. While it may feel like a soft metric, socialization in the workplace impacts hard metrics. 2023 Benefits Trends: The evolving workplace 40
The challenge of how to build productive and successful 昀氀exibility into work has created new opportunities for employers to shift how we work. The rise of 昀氀exible work environments created For example, younger employees (18–34 years old) by the pandemic in 2020 forced businesses to were 59% more likely to leave if a hybrid workplace 昀椀nd ways to operate within and outside of the was not o昀昀ered than older ones (55–64 years old). traditional models of working. Today, the workplace Employees with disabilities were 11% more likely landscape has completely shifted from the previous to prefer a hybrid work model than employees and predominant o昀케ce dynamics to experiments in without disabilities. More than 70% of men and hybrid, full 昀氀exibility, and co-working environments. women expressed strong preferences for hybrid “At the heart of this is the growing need for work, whereas non-binary employees were 14% 昀氀exibility in where, when, and how employees more likely to prefer it. LGBTQ+ employees were 4 work.” The ways in which we work together have 13% more likely to prefer hybrid work than their forever changed, and many employees want to heterosexual peers. More generally speaking, when keep it that way. people have the chance to work 昀氀exibly, 87% of 5 them take it. 2023 Benefits Trends: The evolving workplace 41
59% of younger employees were more likely to leave if a hybrid workforce was not o昀昀ered than older ones. 11% of employees with disabilities were more likely to prefer a hybrid work model. 87% 13% of LGBTQ+ employees of people take the were more likely to prefer hybrid opportunity to work work than did their 5 昀氀exibly when o昀昀ered. heterosexual peers. 2023 Benefits Trends: The evolving workplace 42
Current levels of working from home are highest for the information, 昀椀nance, and professional and business sectors Information (incl. part of tech) 2.61 Finance & 2.25 Insurance Professional & 2.05 Business Services Wholesale Trade 1.92 Real Estate 1.76 Arts & 1.70 Entertainment Construction 1.57 Other Personal 1.50 Services Utilities 1.34 Government 1.32 Health Care & 1.27 Social Assistance Education 1.25 Manufacturing 0.85 Retail Trade 0.82 Transportation & 0.78 Warehousing Hospitality & 0.63 Food Services 0.0 0.5 1.0 1.5 2.0 2.5 2023 Benefits Trends: The evolving workplace 43
Hybrid work has the potential to o昀昀er a higher level of 昀氀exibility, a better work-life balance, and a more tailored employee experience. These environments can also have a disproportionately positive impact on diversity, equity, and inclusion (DEI) e昀昀orts, as well as on 7 overall employee performance. For jobs that can be performed remotely, organizations are… 3 2.7 × × more likely to report that more likely to report that remote work has had a remote work has had a positive positive impact on attraction. impact on retention. For jobs that cannot be performed remotely, organizations are… 4.2 2.8 × × more likely to report that more likely to report that remote work has had a negative remote work has had a negative impact on attraction. impact on retention. 2023 Benefits Trends: The evolving workplace 44
73% of employers plan to implement a hybrid work environment if they haven’t yet.9 2023 Benefits Trends: The evolving workplace 45
While the majority of people report wanting the ability to work in a hybrid environment, 60% of people still 10 don’t have jobs that can be done from home. 35% Number of workers, extrapolated5 o昀昀ered remote work on a full- time basis 55 million 23% 36 million o昀昀ered remote work part-time or on occasion 42% 66 million not o昀昀ered remote work opportunities This has created division in the workplace, often creating an unequal 7 playing 昀椀eld. Proximity bias, for example, happens as in-o昀케ce workers get more attention from their managers and better reviews than their peers. Remote workers aren’t getting the same amount of recognition for the work that they are doing. In particular, there’s research showing that remote workers are working longer hours and actually performing 9 better, but are 50% less likely to get promoted. There is work to be done in making each environment more equitable. 2023 Benefits Trends: The evolving workplace 46
As companies continue to build these kinds of solutions, it is important to know about a new report from WFH Research showing that employees value 昀氀exibility as much as they value a 10% pay raise, and 67% say they feel more empowered to take advantage of 昀氀exible work opportunities. This creates a level of urgency for employers to ramp up their tactics in hybrid, 10 昀氀exible work to increase employee retention. 2023 Benefits Trends: The evolving workplace 47
Employees have been clear that they deeply value non-monetary bene昀椀ts like expanded 昀氀exibility, career growth, well-being, and upskilling. This has only grown since 2019. For companies to shore up retention and support recruitment they need to reevaluate current bene昀椀ts and adjust. For companies that don’t currently have data to support what needs to be dropped and what needs to be added, there is an opportunity to create a feedback loop that enables employers to create more personalized options for their employee base. 2023 Benefits Trends: The evolving workplace 48
Mental and behavioral health bene昀椀ts will dominate as it relates to increasing the incentives employers o昀昀er in the coming years. In 2022, nearly 23% of employers focus on behavioral incentives have added new mental health as well. Studies are showing 11 bene昀椀ts. According to a newly that providing these types released Mercer survey analyzing of incentives has signi昀椀cant health and bene昀椀ts strategies bene昀椀ts for both the employers 23% 12 for 2023, strategies for mental and the employee. health incentives will continue of employers added new and will now include a stronger mental health bene昀椀ts in 2022. 2023 Benefits Trends: The evolving workplace 49
The more well-being resources an employer provides, the lower their average turnover. –Beth Umland, Mercer’s Director of Employer Research for Health and Bene昀椀ts 2023 Benefits Trends: The evolving workplace 50
New research 昀椀nds that employer-sponsored behavioral health programs move the needle in a positive direction. Results of this cohort study found that these programs were associated with large clinical improvements in depression and anxiety, fewer missed days of work, and a positive 昀椀nancial ROI across all employee salary levels. However, for employers to see these results requires a higher level of communication and transparency on the employers’ side to ensure employees that have access to these kinds of services are not only made aware, but are reminded and even pushed to use them. In addition to the health and productivity bene昀椀ts, the study revealed that mental health bene昀椀ts 13 improve retention for employers. 35% of employers will provide managers with training to recognize 14 employee behavioral issues. 26% of employers will o昀昀er 14 employee and peer training. 2023 Benefits Trends: The evolving workplace 51
Types of mental health support 11 employers are o昀昀ering. The share of workers who say these types of mental health bene昀椀ts are available from their employer: Employee assistance programs 28% Reading material & educational resources 21% Additional time off for a mental health day 19% Tela-doc mental health services 19% Hosting events for mental health 18% awareness & education Providing colleague connections through 17% company-wide games or competitions Virtual yoga or meditation 16% sessions during work Something else 7% None of these 36% Survey results released in August • All respondents provided some telehealth by America’s Health Insurance Plans coverage for mental health services. (AHIP) highlight how health plans • The number of in-network behavioral health are improving access to mental providers o昀昀ered by health plans grew by an health, also called behavioral average of 48%. health, services by bringing more • The overwhelming majority of health plans are high-quality providers into their actively recruiting mental health care providers, networks and helping patients including practitioners who re昀氀ect the diversity of the people they serve. 昀椀nd available mental health • 78% have increased payments to providers in appointments. Based on responses from administrators of plans e昀昀orts to recruit more high-quality professionals representing 95 million enrollees, to their plan networks. the survey found that: • The number of providers eligible to prescribe medication-assisted therapy for substance use, 15/16 including opioid dependence, has grown 114%. 2023 Benefits Trends: The evolving workplace 52
There are ways to uncover more a昀昀ordable and empathetic solutions for mental and behavioral health. While larger companies can a昀昀ord the higher costs of incentives in their areas, any company no matter the size must consider how to o昀昀er support. By identifying what your speci昀椀c workforce needs, there will always be ways to both normalize mental and behavioral health and provide space and time for people to recover. 2023 Benefits Trends: The evolving workplace 53
Prioritize holistic well-being It’s crucial to remember that employees We also o昀昀er a host of training solutions are more than employees—they’re for employers to engage with. Our clients people. Everyone has their own individual have access to Mental Health First Aid, needs, wants, and challenges. To that end, which a昀昀ords employees the opportunity we o昀昀er consulting services that help you to train in the program. They can learn o昀昀er care for your employees in areas the signs and symptoms of someone that often go overlooked. who might be experiencing a mental health challenge. These people can be One solution we o昀昀er is our Dimensions present and hopefully support others in of Well-being consulting. Our health times of potentially great need. management consultants can create a custom, comprehensive approach for your organization with actionable tactics to implement. MMA also o昀昀ers several self-serve tools like our well-being playbooks, mental health toolkit, and well- being communication toolkit. 2023 Benefits Trends: The evolving workplace 54
Changes in END health care economics R Costs continue to rise as the burden T 3 gets heavier on employers across health care services and solutions 2023 Benefits Trends: The evolving workplace 55
With in昀氀uences like shifting employment trends, deferred utilization, and pressures on unit costs, the economics of health care are getting heavier 1 and more complex. While the impact of COVID as dollars even further, and health a health care issue has slowed, care expenditures are at the the lasting e昀昀ects in other areas top of the list. In fact, annual leave companies needing to health spending in the U.S. focus their e昀昀orts to keep costs increased by 9.7% in 2020 to 23% 2 in check. For example, while the $4.1 trillion. Inpatient care costs labor market is seeing record have increased 37% across the of employers added new lows in unemployment numbers, board. 60% of people reported employers are facing a more experiencing health care mental health bene昀椀ts demanding workforce, workplace costs increases that outpaced in 2022. shifts, and reevaluation of career in昀氀ation in the past three years paths and priorities. and 63% expect that trend to continue, signaling potential cost With rising in昀氀ation, consumer 1 costs, and wage stagnation, challenges in the future. employees need to stretch their 2023 Benefits Trends: The evolving workplace 56
For 2023, the average estimated increase is 7.0% before plan changes and 5.6% 3 after plan changes. Estimated cost increase to renew plans with no changes vs. actual increase after plan changes, among all employers: 9.8% 9.1% 8.2% 8.0% 7.4% 6.9% 7.1% 7.0% 6.3% 6.5% 6.3% 6.3% 6.1% 6.1% 5.9% 5.8% 5.6% 5.3% 4.1% 4.4% 3.9% 3.8% 3.6% 3.4% 3.0% 2.4% 2.6% 2.1% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Expected trend before plan changes Trend measured after plan changes U.S. employers can expect health bene昀椀ts cost to increase to 7% but through 3 plan management and strategic changes, the shift can get to 5.6%. Today, the average costs for employers that pay for health care will increase somewhere between 6.5% and 7%, which equates to more than $13,800 per employee in 2023. This is double the 3% increase for health care budgets employers experienced from 2021 to 2022. This is the average increase that employers can 4 expect if they stick with their current plans. 2023 Benefits Trends: The evolving workplace 57
Health bene昀椀t cost per employee rose 3.2% in 2022, but employers 3 see bigger increases ahead Most employers are prioritizing enhancing bene昀椀ts to attract and retain workers over cost-cutting 16% 14% 14.7% 14.0% 12% 10% 8.0% 8.4% 8% 6% 7.0% 3.2% 3.6% 5.4% 4% 2.5% 4.6% 2% 2.4% 2.4% 1.8% 0% 1.1% - -2% 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 20222023 Annual change in total health Overall inflation Workers’ earnings Market trends benefits cost per employee (pre-plan design changes) 2023 Benefits Trends: The evolving workplace 58
31% There are a variety of reasons for the rising costs, all of which are coming together in a perfect storm of in昀氀ation, deferred care, supply- chain constraints, retention challenges, and high drug costs. Considering that many have multi-year contracts with health care providers, businesses have not yet felt the full e昀昀ects. The challenge employers face in understanding and 15% estimating the cost of their employee bene昀椀ts 14% programs continues to prove di昀케cult. 8% 7% 5% 5% 5% 5% 3% 1% Hospital care Prescription drugs Clinical services Home Other personal Net cost of Nursing care facilities health care health care health insurance Investment Government Physician services Government public administration health activities Typically, medical in昀氀ation outpaces in昀氀ation in the rest of the economy. But in 2022, medical prices are growing at a similar rate as in past years, while prices in some other parts of the economy are growing much more rapidly than in the past. –Peterson-KFF, Health Systems Tracker5 2023 Benefits Trends: The evolving workplace 59
We anticipate frequency and severity of medical stop loss claims to tick up as the 2022 year 1 progresses and extends into 2023. This is an outcome of deferral on specialty pharmacies, site challenges and a direct result of of care, and support from drug macro economic factors. These manufacturers to lower out- impacts have made their way of-pocket costs. It also means to health care, spiking costs employers are demanding 49% to providers and expecting integrated care management to increase over the next 昀椀ve from PBM’s and health plans as of all large employers years. One of the top in昀氀uences well as supplemental specialty contributing to the rise in costs pharmacy coverage and captive and 58% of those are worsening availability of arrangements. with 20,000 or more 6 clinical labor sta昀昀. The use of targeted programs employees o昀昀er these With cost increases looming, aimed at speci昀椀c health types of programs or are employers are refocusing on cost conditions (e.g., diabetes, seriously considering it. management strategies to slow musculoskeletal, COPD) has increases over the long term, gained traction in recent years while minimizing cost shifting as a way to achieve better 4,7 to employees. This includes outcomes and lower costs. plan design changes focusing 12% of all employers have adopted enhanced clinical management models beyond the standard 7 health plan model. 2023 Benefits Trends: The evolving workplace 60
Employers are also steering employees to high-value care, including alternative networks, high- performance networks, and centers of excellence. These approaches deliver savings focusing on the quality and e昀케ciency of a provider network, rather than its breadth. Navigation or advocacy services can also be used to steer employees to higher-value care. Research shows that primary care can deliver greater health care value through its focus on prevention, early detection, and more cost- 7 e昀昀ective specialists. 34% of employers are using various network strategies 7 to manage costs. Employers are also looking to invest in population health management programs and enhanced clinical management models. Integration in the areas of primary care physicians, specialists, and hospitals provides medical, care, and patient management processes designed to improve a fragmented delivery system. One where incentives are aligned and better health outcomes 7 can be achieved. 2023 Benefits Trends: The evolving workplace 61
84% of employers (those with 500 or more employees) rated enhanced health care bene昀椀ts as important or very important to improve 7 attraction and retention. 2023 Benefits Trends: The evolving workplace 62
Health care costs will continue to create di昀케culties when it comes to management and delivery. Getting creative with di昀昀erent solutions across plan designs and o昀昀erings is key. There will be no one-size-昀椀ts all solutions as workforce needs and broker o昀昀erings are so varied across industries and companies; however, as holistic well- being and population health management grow in importance, this is an opportunity employers must create and connect strategies to, in the pursuit of cost-savings. 2023 Benefits Trends: The evolving workplace 63
High cost of prescription drugs remains a source of frustration for employers, especially with a pipeline of cell and gene therapies that are expected to create much higher claims. Specialty biotech drugs have However, with high-dollar claims revolutionized treatments for becoming more frequent, it conditions such as HIV, multiple comes down to an employer’s sclerosis, cancer, and rare overall risk tolerance as a genetic conditions. They are self-funded plan sponsor. 50% also very, very expensive. In The question becomes: is recent years employers have there a preference to pay a of employers surveyed reported double-digit increases capitated rate or a higher in their specialty drug costs. Cost premium for claims that may say they are taking adaptation for those who need never materialize, to avoid the focused action to manage higher-cost prescriptions or shock waves of million-dollar 9 specialty drug costs. more costly medical treatments and above claims? There is can put employers at risk. On no right or wrong answer to average, insurance covers a this question. It simply comes larger share of retail prescription down to what works best for an drug spending than a decade employer, their employees, and ago, while consumers’ share has the plans they choose. 8 leveled o昀昀 in recent years. 2023 Benefits Trends: The evolving workplace 64
Plans are shifting. New plan of biosimilars, a cheaper but available is expected to more designs can steer patients to a still costly version of branded than double in the next two specialty pharmacy, focus on biologic medicines, have started years and triple in the three the site of care, seek support to increase in the U.S. years after that. The global cell from drug manufacturers to Approvals for cell and gene and gene therapy market is lower member out-of-pocket therapies continue to grow at an projected to grow from $6.58 costs, demand integrated care unprecedented pace. Currently, billion in 2021 to $8.57 billion in management from PBMs and there are more than 1,000 2022, up 30%, and reach $21.33 health plans, and mitigate claims therapies in the development billion in 2026, a compounded 1 risk via authorization programs, and approval pipeline worldwide. annual growth rate of 26%. stop loss coverage, or captives. The number of therapies Plans that cover the use and cost 2023 Benefits Trends: The evolving workplace 65
Process of 9 Preclinical study clinical trials Learning how a treatment works in test tubes and animals to determine potential safety and effectiveness. Application period Researcher submits an Investigational New Drug (IND) application to the FDA for a proposed clinical trial. Phase I Involves the fewest participants, making sure the therapy is safe, and finding the right dosage. Phase II More participants and researchers look for favorable or useful effects while monitoring safety. Phase III The longest phase, with the most participants, proves the therapy has the desired result while being safe. FDA final approval Biologics License Application (BLA) is submitted to the FDA and is thoroughly reviewed to determine approval. 2023 Benefits Trends: The evolving workplace 66
It is estimated that in 2023, cellular and gene therapies will total between 70 per million members and 43 per million members compared with just 7 per million members 9 in 2020. 50-100 87% gene and cell therapies are anticipated of employers are concerned 1 to receive FDA approval by 2025. about the new million- dollar treatments getting approved by the FDA.9 2023 Benefits Trends: The evolving workplace 67
Here are a few examples of the cost and prevalence employers can expect from gene therapies. In August 2021, the FDA rejected two emerging therapies. One, for Hemophilia A, had a potential price tag between $2 and $3 million dollars. The FDA is currently re-evaluating it, with many working under the assumption that an approval will be forthcoming in 2023. This leaves many plan sponsors and stop loss carriers trying to plan for the eventual approval. Another therapy recently approved was for a very rare, inherited blood disorder. The estimated U.S. impact is 1 in 100,000 people. The treatment for this condition often results in frequent blood transfusions; that not only result in plan costs, but patient risk. The wholesale cost for this therapy is $2.8 million.8 The impact of these drugs and and the market in general • Center of excellence (CoE) therapies cannot be understated understand their risks within solutions ensure that drug for employers. Historically, most their populations, determine procurement is competitive plan sponsors have excluded how to 昀椀nance the risk, and and is administered with CoE- cellular and gene therapies provide warranty solutions negotiated rates. from coverage because they are that help provide an avenue to • Stop loss/reinsurance solutions ensure that value is delivered considered experimental and to the patient and the plan. o昀昀er step-down deductibles investigational in nature. As The following solutions vary in coordination with TPB and these therapies have improved, PBMs, where they can cover more insurers, third-party signi昀椀cantly and include their own risk. administrators (TPAs), and self- advantages and disadvantages, • And 昀椀nally, 昀椀nancing solutions funded plans are making the target markets, costs, etc., where outcomes-based and determination to cover. Plans with no solution solving for the entire risk equation for payers warranty solutions bene昀椀t may elect to cover through their or plan sponsors.8 the payers and the stop loss pharmacy bene昀椀t management carriers, but not the plan program, through capitated or 9 Here are a few solutions in brief: sponsors themselves. pooled solutions, and through • Capitation solutions will stop loss coverage now available in the market. cover speci昀椀c cell and gene therapies, with many subject Many more solutions are to pre-existing condition anticipated in the coming years exclusions and availability may to help plan sponsors, payers, be limited. 2023 Benefits Trends: The evolving workplace 68
How are employers preparing for the potential cost of the 9 impact of high-cost gene and cellular therapies? 1,000 to 5,000 500 to 999 4,999 to 9,999 10,000+ employees employees employees employees Conduct risk assessment to estimate 15% 19% 21% 28% cost exposure Add/enhance stop-loss protection 4% 4% 8% 2% Work with medical carrier/pharmacy vendor 21% 40% 57% 52% on clinical/cost management strategies Other steps 1% 2% 3% 3% No plans, but aware of these therapies and 31% 34% 26% 25% concerned about potential cost impact Aware of these therapies but will treat 14% 13% 7% 6% them like other specialty drugs Not aware of these therapies 17% 7% 3% 6% Employers consider a role for the government in 昀椀nancing 9 high-cost drug therapies. The government 76% negotiates price for all payers for drugs above a certain dollar threshold 70% (e.g., $1M) and paid for out of a national fund. The government 50% implements a stop-loss program where costs above a certain dollar 47% threshold are covered by a national fund. 2019 2020 Shift patients with 35% certain high-cost conditions to Medicare. 40% 2023 Benefits Trends: The evolving workplace 69
As the possibility of million- dollar claims increases and an expanding pipeline of life-saving therapies make their way through the FDA, employers must continue to weigh their responsibility to create coverage that supports employee needs and is 昀椀scally responsible. Time will tell what the best practices for both brokers and employers will be. 2023 Benefits Trends: The evolving workplace 70
The environment of high-cost claimants, utilization increases, and employment trends will keep health care costs higher overall. On average, 3% of annual claimants represent 1 50% of total health care spend. New treatments are emerging, including high-cost injectable and specialty medications, continuing a structure where a small portion of members represent a large portion of health care spend. In the 2021 Mercer National Survey of Employer- Sponsored Health Plans, employers rated monitoring and managing high-cost claimants as the most important health bene昀椀ts strategy for the next 昀椀ve years. Employers will be best served to continue to 昀椀nd creative reinsurance, population health, and cost optimization strategies to mitigate high-cost claimant risk on employer-sponsored 3 health plans. 50%+ of employers surveyed say they are taking focused action to 9 manage specialty drug costs. 2023 Benefits Trends: The evolving workplace 71
Quarterly utilization/1,000 for same-day 1 services by plan deductible. $100K $150K $200K $300K $500K 60 40 Utilization/1,00020 0 2018Q12018Q22018Q32018Q42019Q12019Q22019Q32019Q42020Q12020Q22020Q32020Q42021Q12021Q22021Q3 For a wide variety of reasons, many individuals chose to forgo medical visits during the pandemic. As the number of medical visits picks back up in the remaining months of 2022 and into 2023, we are likely to see an increase in the severity of newly diagnosed patients and increased complication rates for those with existing chronic conditions. The pandemic’s long tail may increase utilization and health care spending in 2022 thanks to the return of some care deferred during the pandemic, the ongoing costs of COVID-19, increased mental health and substance use issues, and worsening population health. 2023 Benefits Trends: The evolving workplace 72
One consideration is the or age of the remaining and premium rates may impact employee trends employees is higher, increase during the year will have on employers. the premium rates may for self-funded employers As businesses consider increase during the year and at renewal time for layo昀昀s or selling parts for self-funded employers fully insured employers. of their companies, the and at renewal for fully The good news is these impacts to the health insured employers. are issues that can be 10 plan are not always top Employees are working planned for. of mind. Any time that longer, in some cases well a material portion of beyond the traditional individuals leave a health age of retirement. The plan, suddenly two new U.S. Bureau of Labor risks present themselves. Statistics estimates that 15% First, employers may see by 2024, a quarter of the workforce will be over the of American consumers a signi昀椀cant increase age of 55, and of these, a with employer-sponsored in claim payments as third will be 65 or more. insurance said they had employees exit the Retiree-age workers are deferred some care organization. This is more likely to remain on between March and typically a temporary an employer-sponsored 1 increase, though not one health plan during periods September of 2021. to be ignored. Second, of uncertainty. Therefore, if the average risk for the average risk is higher 2023 Benefits Trends: The evolving workplace 73
Although virtual visits and telehealth care aren’t new, utilization increased substantially during the pandemic—and has continued to trend upward. Virtual visits are a lower-cost way to deliver health care for providers, though the increase in utilization also comes with the need to share patient data with multiple providers. Health care data is highly sensitive and sharing it among providers can be a nuanced process. While each situation is unique, in general, any decreases in coordination of care can also increase costs. 2023 Benefits Trends: The evolving workplace 74
Navigate economic 昀氀uctuation Of course, we also o昀昀er solutions that pharmacists review your data periodically focus speci昀椀cally on your business that to 昀椀nd opportunities beyond just the PBM will help you navigate the changing contract, resulting in additional savings. economic conditions currently facing The MMA Planning and Analytics for Total many organizations. Health (PATH) team helps our clients Fully insured clients can take advantage use their medical claims data to drive of a number of solutions, such as our actionable health outcomes and cost- stellar actuarial specialists. Our actuarial savings. PATH makes data valuable. Our team can help you see both the big team transforms health care data into picture and the small details. Managing innovative and prescriptive strategies health care costs is a multi-disciplinary that help businesses o昀昀er competitive, challenge and requires a multi- cost-e昀昀ective bene昀椀ts while engaging disciplinary team. By working with MMA, employees to optimize their health. you get access to unparalleled global Additionally, our Compliance Center of resources, hand-delivered by a team Excellence (CCOE) helps our clients by of actuarial, clinical, and compliance keeping them informed of legislation specialists who understand your business acutely and who can advise you that could a昀昀ect their business and on cost management and other strategic employee bene昀椀t plans. Between solutions. We partner with you to identify individual state laws and federal regulations, it’s a lot to keep track of your risk, measure potential 昀椀nancial and it can be di昀케cult to determine exposures, and o昀昀er long-term strategies for sustainable health plans. what a昀昀ects you directly. Our CCOE takes an approach that involves For our self-funded or health captive consistent communication, thoughtful clients, stop loss coverage protects your education, and critical support organization when catastrophic claims when it comes to making sure your arise. However, not all coverage is the organization is complying with all the same. Contract terms and conditions can latest applicable regulations. vary signi昀椀cantly. The MMA Stop Loss Advisory Practice can help you get the These are just some of the solutions most out of your stop loss contract terms. MMA can o昀昀er you. We provide services tailored to 昀椀t your needs—all backed SM MMA Rx Solutions delivers signi昀椀cant by a broad scope of global resources. savings to self-insured health plans by Reach out today to get in touch with an focusing on contract language, clinical MMA consultant and start building your and formulary management strategies, strategy for 2023 and beyond. and employee purchasing trends. Our dedicated team of actuaries and 2023 Benefits Trends: The evolving workplace 75
Political and legislative considerations As employee demands continue to rise, employers must also consider and take on some of the legislative pressures and compliance burdens. 2023 Benefits Trends: The evolving workplace 76
Greater transparency, equity for mental and behavioral health, and the rising costs of prescriptions are the key issues getting bipartisan support across legislative bodies. The pendulum will continue to years, we should see shifts examples of where state swing on issues like the In昀氀ation in the choices made by both administrations, more than Reduction Act and Paid Family employers and employees. the federal government, will Leave as both federal and state Mental health parity laws continue to impact employers administrations change. play a huge role in the wide and employees. States will be Greater transparency will help range of telehealth services asked to work directly with drug employers and employees that medical and behavioral manufacturers to negotiate address wide price variations, health professionals can o昀昀er. drug costs due to in昀氀ation. reduce waste in the health care These laws make it possible Most states at this point have system, and help individuals for patients to get equal or adopted or considered adopting make more informed choices comparable access and bene昀椀ts paid family leave, and other about health care spending. As to health care relating to any states are currently considering the Transparency in Coverage physical conditions or needs. legislation that would provide Act, the No Surprises Act, and paid family leave only for government employees. Rx reporting will all come to The In昀氀ation Reduction Act full fruition in the next few and Paid Family Leave are 2023 Benefits Trends: The evolving workplace 77
First and foremost is the passage and implementation of both the Transparency in Coverage rule and the No Surprises Act. The goal of the new transparency legislation is to: The Transparency in Coverage rule will be • Empower, inform, and incentivize action from implemented in three phases. consumers that enable comparison shopping. The 昀椀rst phase is the public posting of pricing • Shine light on hidden business arrangements data, known as the “machine-readable 昀椀les” or between payers and providers to stabilize and “MRFs.” The second phase is progressing to a more reduce the price of health care services overall. personalized transparency experience for plan • Expose real-time pricing information and out-of- members in 2023 and 2024. The 昀椀nal phase is a pocket liability so the U.S. can establish a market- deployment of a consumer cost estimate tool. This driven health care system. will require plan sponsors of self-insured plans and fully insured group health plans to disclose • Create a foundation of pricing data standards extensive price and cost-sharing information across the board. through public disclosures and plan participant disclosures.1 1 Transparency in coverage: What are the key phases and scope? Phase 2: Phase 3: Phase 1: Document Personalize Expand January 1, 2022 January 1, 2023 January 1, 2024 (enforcement delayed until O昀昀er an internet-based, Expand the internet- July 1, 2022) consumer cost-estimate based consumer cost- Created public machine-readable tool that provides estimate tool to include 昀椀les (MRFs) that display in-network personalized, out-of- cost estimates for all rates, out-of-network allowed pocket cost estimates and covered items, services, amounts, and prescription other price-related data and prescription drugs. drug pricing.1 for 500 pre-determined • Plan years beginning from 1/1/22 items and services. to 6/30/22 began disclosing the 昀椀rst MRF (medical) by July 1, 2022. • Plan years beginning on or after Quality data is not part of the 7/1/22 began disclosing by the end of the month in which the mandatory disclosures in the rules. year begins. 2023 Benefits Trends: The evolving workplace 78
The No Surprises Act create a dispute resolution the employers are free became e昀昀ective on system between plans and clear of compliance January 1, 2022 and and providers (as well as responsibilities. The was designed to protect patients and providers). regulations will require patients from surprise In most instances, the several plans to amend bills for emergency insurance carriers/ their claims and appeals services at out-of-network TPAs will bear the procedures, certain facilities or for out-of- administration burden group health plans will network providers at in- for employer-provided require additional plan network facilities. group health plans, design changes, and The Act intends these although we expect employers will need to protections to limit the they will pass the costs address certain disclosure 2 ability of out-of-network through to employers in obligations. providers to balance bill the form of additional plan participants; and to fees. This does not mean 2023 Benefits Trends: The evolving workplace 79
Secondarily, the focus is on both the rising costs and mandated Rx reporting. A new prescription drug drugs in premium increases, Several solutions being reporting mandate, adopted as helping to identify excessive discussed at this stage are part of the 2021 Consolidated drug pricing due to market government intervention via Appropriations Act, requires concentration, promote generic high-risk pools, leveraged group health plans and health drugs, and address the cost purchasing, or shifting patients insurers in the group and impact of drug manufacturer to Medicare as 80% of large individual markets to report rebates. The Rx and health care employers are concerned that annually certain information spending reporting rule applies current strategies to 昀椀nance about drug and health care to health insurers and ERISA high-price therapies do little to spending to the federal group health plans, whether fully address overall price. government. This includes insured or self-insured. information about health care spending by category, the most frequently dispensed and costliest prescription drugs, and information about rebates paid by the drug manufacturers to plans, issuers, TPAs and PBMs. It also will provide transparency around the impact of complex drug pricing mechanisms, rebates, fees, and other remuneration paid by drug 2 manufacturers on premiums. The data will be used to prepare a publicly available report about prescription drug reimbursements and pricing, and the role of prescription 2023 Benefits Trends: The evolving workplace 80
Employers consider a role for the government in 2 昀椀nancing high-cost drug therapies. The government negotiates price for 70% all payers for drugs above a certain dollar threshold (e.g., $1M) and paid for out of a national fund. The government implements a 47% stop-loss program where costs above a certain dollar threshold are covered by a national fund. Shift patients with certain high-cost 40% 2020 conditions to Medicare. 2019 Do employers want the government to play a role in managing high-cost drugs? 15% 15% of large employers would of large employers are welcome government concerned that current intervention in managing strategies to 昀椀nance high- high-cost drugs (up price therapies do little 4% from 2019). to address overall price. 2023 Benefits Trends: The evolving workplace 81
Third, but equally important, is equity as it relates to both mental and behavioral health parity. The Senate Finance Committee aims to introduce bipartisan legislation in 2023 that addresses behavioral health care issues. Both chambers will continue to work on proposals to expand access and services to include expanding the use of telehealth, supporting employers’ ability to o昀昀er mental health services in employee assistance programs, encouraging the Department of Labor to provide clearer guidance on how to comply with mental health parity rules, and exploring policies to increase network participation by mental health providers. The Mental Health Matters Act would give the Department of Labor more authority to enforce plan requirements under the Mental Health Parity and Addiction Equity Act and the Employee Retirement The networks of mental health available care provider. For Income Security Act, ban forced care providers a昀케liated with those patients fortunate enough arbitration agreements when individual insurance plans are to locate a mental health care plans improperly deny bene昀椀ts, woefully inadequate, leaving provider in-network, wait times and ensure a fair standard of most people requiring care are usually so long as to put the review by the courts. with no choice but to 昀椀nd any patient’s life in grave danger. 2023 Benefits Trends: The evolving workplace 82
Finally, the ever-shifting reality and in昀氀uence of both federal and state administrations continues to impact speci昀椀c areas of healthcare-related legislation. In昀氀ation continues to rise to levels not seen for decades. In general, it’s becoming more di昀케cult to suppress increases for all expenses. However, it remains to be seen how e昀昀ectively the measures the government has implemented to date will curb in昀氀ation. The longer the elevated levels remain, the larger the impact. It’s worth noting that although health care costs have risen more quickly than the Consumer Price Index historically, they are much less volatile. In its own words, the CPI is “a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and and 24% for broad categories occur for health care, an upward services.” As of August 2022, of goods, including food and adjustment of 1%–2% from the CPI has recorded year-over- 4 year increases between 6% energy. Rather than assuming historic levels is more likely. the same level of increase will 2023 Benefits Trends: The evolving workplace 83
Annual change in Consumer Price Index for All Urban Consumers (CPI-U), July 2001 - July 20224 All goods and services Medical care 8.3% 8.0% 6.0% 5.7% 5.4% 5.2% 4.8% 4.7% 4.2% 3.9% 4.1% 4.0% 4.1% 3.9% 4.0% 3.7% 3.6% 3.7% 3.4% 3.5% 3.5% 3.2% 3.0% 3.0% 2.9% 2.3% 2.4% 2.2% 2.4% 2.3% 2.3% 2.4% 2.0% 1.7% 2.0% 1.9%1.9% 2.0% 1.8% 1.9% 1.8% 1.2% 1.3% 0.7% 0.7% 0.4% 0.0% 0.1% -2.0% - 2.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 With the potential of an economic recession and the continued rippling e昀昀ects of the COVID-19 pandemic, the challenge employers face in understanding and estimating the cost of their employee bene昀椀ts programs continues to prove di昀케cult. The future of health care law is in no way set in stone. The best course of action is to stay updated and understand how current legislation at both state and federal levels will a昀昀ect businesses and what health care plans will o昀昀er as solutions to support them. 2023 Benefits Trends: The evolving workplace 84
Tomorrow’s workforce is looking for more than a bene昀椀ts plan. Marsh & McLennan Agency While predicting and responding (MMA) o昀昀ers a range of to employee bene昀椀t trends solutions to support the needs and employee expectations of your people, your team, and can be di昀케cult, MMA is here to your business. We specialize help make it easier. We o昀昀er in helping middle-market solutions that help you stay in organizations—whether self- touch with your employees and funded or fully insured—昀椀nd streamline how you o昀昀er the ways to provide their employees bene昀椀ts they need. with bene昀椀ts they can take advantage of. 2023 Benefits Trends: The evolving workplace 85
Sources ESG Trend 2: Mental and behavioral Trend 3: Changes in health care 1. “ESG as a Workforce Strategy,” health needs economics Marsh & McLennan Advantage, 1. “Accident & Health Market Report 1. “Accident & Health Market Report 2022, Link 2022,” QBE, 2022, Link 2022,” QBE, 2022, Link 2. “Employees Want Wellbeing From 2. “Health and Economic Costs of Trend 1: Shifting workplace Their Job, and They’ll Leave to Chronic Diseases,” CDC, Link expectations Find It,” Gallup, 2021, Link 3. “National Survey of Employer- 1. “Your Organization is Grieving 3. “These are the top employee Sponsored Health Plans 2022,” – Here’s How you can Help,” bene昀椀ts companies will o昀昀er in Mercer, 2022 McKinsey & Company, Link 2023,” Fortune, 2022 4. “In昀氀ation Meets Bene昀椀ts Plan 2. “Help your Employees Find 4. “The Future Of Work Is Employee Designs,” Leaders Edge, 2022, Link Purpose – or Watch them Leave,” Well-Being,” Forbes, 2021, Link 5. “How does medical in昀氀ation McKinsey & Company, 2021, Link 5. “Americans are embracing compare to in昀氀ation in the rest 3. “Majority of Workers who Quit 昀氀exible work—and they of the economy?” Peterson-KFF a Job in 2021 Cite Low Pay, no want more of it,” McKinsey & Health System Tracker, 2022, Link Opportunities for Advancement, Company, 2022, Link 6. “The gathering storm: The Feeling Disrespected,” Pew 6. “SWAA July 2022 Updates,” WFH transformative impact of in昀氀ation Research Center, 2022, Link Research, 2022, Link on the healthcare sector,” 4. “Creating a Meaningful Corporate 7. “Hybrid work: Making it 昀椀t McKinsey & Company, 2022, Link Purpose,” HBR, 2021, Link with your diversity, equity, and 7. “Top 3 Strategies Employers 5. “Three Ways Mid Market inclusion strategy,” McKinsey, will Use to Take on Health Care Companies are Winning the War 2022, Link In昀氀ation,” Mercer, 2022, Link for Talent” EY, 2020, Link 8. “2022 HR Trends Report,” McLean 8. “Gene therapies and the 6. “2022 HR Trends Report,” McLean & Company Trends, 2022 associated 昀椀nancial risk,” & Company Trends, 2022, Link 9. “5 Mental Health Bene昀椀ts Trends Marsh & McLennan Agency, 7. “3 reasons why your DEI for 2022,” The Graham Company, Whitepaper, 2022 initiatives fail,” Bene昀椀tsPRO, 2022, Link 9. “Gene Therapies and the 2022, Link 8. “Five Common Pitfalls That Can 10. “The demand for 昀氀exible work associated 昀椀nancial risk, strategies and solutions,” Derail DE&I Initiatives,” Forbes, ‘will only accelerate’ in coming Marsh & McLennan Agency, 2021, Link years as workers feel more Presentation, 2022 9. “Don’t train your employees on empowered,” CNBC, 2022, Link DE&I. Build their capabilities.” 11. “23% of workers say employers 10. “Navigating troubled waters. In昀氀ation and recessions in health McKinsey & Company, 2022, Link are o昀昀ering new mental health insurance,” Marsh & McLennan 10. “The WHY Behind DE&I: How bene昀椀ts. But is it enough?” Agency, 2022 Diversity, Equity, and Inclusion Fortune, 2022, Link 12. “Health & bene昀椀t strategies for Political and Legislative Initiatives Bene昀椀t Business,” 2023,” Mercer, 2022, Link Workhuman, 2022, Link 13. “Clinical and Financial Outcomes Considerations 11. “Is Quiet Quitting Real?” Gallup, Associated With a Workplace 1. “Employer Playbook: Federal 2022, Link Mental Health Program Before Transparency Requirements,” 12. “‘Great Attrition’ or ‘Great and During the COVID-19 Marsh & McLennan Agency, 2022 Attraction’? The choice is yours,” Pandemic,” JAMA Network, 2022, 2. “Gene Therapies and the McKinsey & Company, 2021, Link Link associated 昀椀nancial risk, 13. “The NLI Interview: Patagonia’s 14. “These are the top employee strategies and solutions.” Dean Carter on How To Treat Marsh & McLennan Agency Employees Like People,” Forbes, bene昀椀ts companies will o昀昀er in presentation, 2022 2020, Link 2023,” Fortune, 2022, Link 3. “Navigating troubled waters. 15. “AHIP July 2022 Mental Health 14. “What is EX? Your ultimate Survey,” AHIP, 2022, Link In昀氀ation and recessions in health guide to employee experience,” 16. “Employers Are Poised to Expand insurance,” Marsh & McLennan Qualtrics, 2021, Link Mental Health Coverage in 2022,” Agency, 2022 SHRM, 2022, Link 4. “Overall in昀氀ation has not yet 昀氀owed through to the health sector,” Peterson-KFF Health System Tracker, 2022, Link 2023 Benefits Trends: The evolving workplace 86
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