Addressing variations in employer health care costs across the U.S.
Discover strategies to help employers manage health care costs, no matter where their employees live.
When it comes to health care costs, it matters where an employee lives.
In fact, health care spending is about twice as much in the highest-cost states as it is in the lowest-cost states, according to UnitedHealthcare data.1
Why? A variety of factors can impact an employer’s per member per month (PMPM) health care costs, including the availability of providers and sites of care in a given area, the quality of care given and any medical conditions that may be more prevalent in a certain region than others.
In other words, these are factors that employers don’t have too much control over. However, knowing the lay of the land when it comes to cost variations across the country can help inform strategies about how to manage costs, no matter where the workforce resides.
Mapping health care costs across the country
UnitedHealthcare data breaks out what states have the highest and lowest health care costs, by business size, and how employers can manage the trend.1
Understanding the challenges faced by certain employee populations, choosing a network that meets employees where they are and educating employees about cost management tools may help lower health care costs.
3 strategies employers can take to manage cost variation
Health care costs are rising across the country, with some states feeling the increase more than others. These strategies may help mitigate the burn of climbing costs.
1. Understand the challenges faced by certain employee populations
It’s important for employers to understand the geographic makeup of their workforce, so they can understand why some employees may account for a larger portion of their cost of care.
To do this, employers can use available data to see how different pockets of the nation may be disproportionately impacted by specific health challenges compared to others. For instance, reports produced by America’s Health Rankings provide in-depth, state-by-state analyses of health strengths and challenges. These insights may help employers understand the reasons they experience higher costs of care among different employee groups.
Employers can also work with their carrier and broker or consultant to get a better understanding based on their specific employee population. Evaluating an employer’s unique health plan performance data may identify gaps in care and provide guidance to better tailor strategies that can help manage cost
2. Choose a network configuration that meets employees where they are
Once employers understand what’s impacting their cost of care, they can select a health plan and network design that enables their employees to access more affordable care.
A broad network may appeal more to employers with geographically diverse workforces, providing employers closer, lower-cost provider options compared to those with less flexibility.
Value-based care networks may help guide employees to providers that aim to deliver a higher quality of care at a lower cost. Additionally, networks that require or encourage employees to establish a relationship with a primary care provider (PCP) may help them receive the most cost-effective care.
Pairing a network with a health plan that provides more upfront cost information can also help employees make more financially informed decisions when seeking care.
3. Educate employees about cost management tools and resources
Encouraging health plan literacy is another way employers can support employees in making more cost-effective care decisions. Especially for self-funded employers, educating employees about the impact their decisions can have on the cost of care may help lower their overall cost trend.
Employers can explain how employees have a variety of choices when it comes to site of care and that there are cost implications for each. This may help employees to better understand when to schedule a virtual visit versus making a trip to urgent care.
Ensuring employees are aware of the cost management tools provided by their carrier and care provider can help them make educated decisions based on their care needs. These resources can include:
- Digital tools to help employees navigate the health system
- Transparency tools that compare the cost of different providers, procedures and medications
- Customer service representatives or advocates who deliver compassionate support, personalized care recommendations and solutions to help employees manage unexpected or out-of-network costs
Ongoing health benefits education may help boost engagement and lead employees to make decisions that lower the cost of care for them, their families and their employers.
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