Is it magic or data? 5 ways to transform healthcare affordability

It’s not just your imagination. Healthcare costs are rising at an alarming rate. Over the last 25 years, healthcare premiums have grown three times faster than wages, creating a significant strain on the workforce.¹

According to a Kaiser Family Foundation report, nearly 1 in 4 adults delayed or skipped critical care last year due to cost.² This leaves both employees and employers grappling with affordability challenges. As economic uncertainty rises, it’s a good time to ask: What if there were a way to use data to control costs and also improve care?

Ways to bring healthcare costs down for employers and employees

Offering health benefits to attract and retain talent is a longstanding strategy for employers. But employers are facing tougher challenges when it comes to balancing affordability, giving employees access to quality care, and managing benefits budgets.

Is there any hope? Yes. Data-driven solutions offer a way forward. If you missed the latest webinar on this topic, you can catch the replay.

Understandably, webinar attendees listed the cost of medical care (58%) and cost of prescription medications (21%) as the top healthcare affordability challenges their organizations face. And when asked about solutions that would be most helpful to solve their problems, 35% wanted to see higher member engagement with their existing benefits. Lastly, 29% hoped for ways to analyze existing medical costs.

Fortunately, there are several ways to increase engagement and get more insights on existing costs. Let’s explore how fresh ways to surface data strategies can give HR professionals, business owners, and employers strategies to lower employee healthcare costs.

1. HSA plan optimization to break the high cost cycle

Data can guide employers in crafting more effective benefit plans. For example, high-deductible health plans (HDHPs) coupled with Health Savings Accounts (HSAs) are a good solution to help reduce costs for employers and employees alike.

Employers who pair HDHPs with meaningful HSA contributions, such as seed funding or matching, see higher employee enrollment and engagement. In the previously cited 2024 Kaiser Family Foundation Employer Health Benefits Survey, employers realize an average of 9% premium savings when offering HDHPs, especially when employees are equipped with the right education and tools to make informed use of HSAs. For example, companies that include an HSA contribution model—such as a seed plus match—see a 15% higher enrollment rate compared to those who offer no contribution at all.

“Many of our conversations with clients begin with plan design, even when we’re working with a client who has an existing program. This is often the best place to start changing behavior and improving responsiveness,” said Tene Raymond, Director of Enrollment and Lifecycle Marketing at HealthEquity.

2. Encouraging preventive care and healthy behaviors

Engaging employees in preventive care and healthy behaviors isn’t just good for their wellbeing; it’s essential for long-term cost management. However, not everyone takes advantage of preventive care. For example, in 2020 only 5.3% of adults over age 35 received all recommended annual preventive care services, a drop from 8.5% in 2015.³ That pandemic dip in routine doctor visits may prove difficult to overcome.

Why does it matter? Preventive care leads to better outcomes and lower long-term costs— regular care can help avoid certain chronic conditions. Awareness and motivation are key to encouraging people to make those annual appointments. Employers can leverage communication strategies such as personalized education, breakroom screens, videos, and email campaigns to spread the word about the importance of scheduling yearly check-ups.

Clear, accessible data about preventive care availability and its benefits can help employees prioritize these services. After all, many preventive services are free under HDHPs and ACA-approved plans, yet awareness remains low.

“We found that employees are happiest when they’re informed,” said Raymond. “Time and time again, we find that employers who prioritize engagement end up with happier employees.”

3. Smarter healthcare shopping for cost and quality

The cost of healthcare isn’t just about high bills. It’s about wildly varying prices for the same services. And the (sometimes extreme) healthcare price variation often adds unnecessary costs. For example, the cost of an MRI can vary widely within a single city—from $400 at a high-value provider to $1,500 at a higher-cost option delivering similar quality.⁴

Most employees lack access to tools or resources that encourage them to shop around for better-value care. By using price transparency tools, employees gain access to important data, such as cost estimators and provider ratings.

Employers that implement these tools can see impactful results. One healthcare provider significantly reduced costs after introducing a navigation tool that helped 34% of employees shop for care based on cost and quality. Overall, the company saw a 22% average active shopper realized savings for a total $3.1 million saved in employer healthcare spend in the first year and a half.

“It’s crucial to provide employees with this information so they can make informed decisions,” said John Zacharia, HealthEquity General Manager, Assist. “You don’t want employees to choose a low-cost provider that doesn’t deliver the desired care quality.”

4. Rewarding smarter choices with timely incentives

Engagement increases when employees have incentives to make cost-effective decisions. Companies have options to reward employees for choosing lower-cost, high-quality providers. Did you know incentives can sway people to see a different provider? When offered $50, 41% would switch to a lower-cost medical service. That number rises to 52% when offered a $100 incentive.⁴

With rewards tied to HSA contributions or other financial benefits, employees are more likely to engage with tools and make better-informed decisions about their care. This trifecta of cost transparency, quality ratings, and employee incentives ensures savings on both ends. Employers save on healthcare costs, while employees benefit from reduced out-of-pocket expenses.

5. Real-time program tracking for continuous improvement

How do employers overcome affordability challenges? Through compelling insights into healthcare utilization patterns and savings trends, employers can refine their strategies. When they do this and offer appropriate incentives, it’s possible to boost HDHP and HSA enrollment.

New analytics tools allow employers to track healthcare plan performance and make data-driven adjustments over time. For example, employers can:

• Monitor HSA balances, investments, and member engagement regularly.⁵
• Use benchmarking tools for comparisons against industry peers to determine where the plan excels or requires improvement.
• Identify overspending by comparing actual costs with lowest-cost alternatives.
• Develop cost-saving interventions by diving into details on what’s driving high costs.
• Track spending trends to anticipate, strategize, and mitigate potential overspending.
• Find high-risk members to better prioritize their preventive care.

Overall, these analyses empower employers to develop actionable next steps to optimize costs and engagement. By using a mix of frequent, high-level reports and in-depth, periodic reviews, organizations can ensure their healthcare strategies work well and remain responsive to changing needs.

Enhanced engagement with actionable insights

Here’s one way you can make a dent in healthcare benefits affordability. There are cutting-edge tools, like Analyzer^TM from HealthEquity, to help employees make smarter healthcare decisions and take control of their health. By analyzing real-time engagement data, employees get incentives and education strategies that will match their needs.

Messages sent via familiar channels such as email, text, or app notifications can remind employees to:

• Make their next HSA contribution.
• Take advantage of preventative care offerings.
• Compare prices before scheduling a medical service.

Not only does this improve employee wellbeing, but it also leads to tangible savings for both employers and employees by minimizing delayed treatments or skipping care altogether.

New healthcare affordability solutions for the long-term

Employers can no longer afford to rely on traditional methods when addressing healthcare affordability. To achieve meaningful savings and improve health outcomes, businesses need data-driven solutions that match employee needs while reining in costs.

Smarter tools like HealthEquity Analyzer^TM and HealthEquity Momentum^TM empower organizations to reimagine their approach to healthcare. By helping employees make informed choices, employers can close the affordability gap, foster healthier behaviors, and improve organizational outcomes.

Solving today’s healthcare affordability challenges requires sophisticated, targeted strategies. Data is the key to turning analytics into action, creating a sustainable and affordable healthcare system for employers and employees alike.