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Healthcare

Expert: Beating the Cost Crunch by Rethinking Benefit Plans

As consumers are pressed by rising prices and inflation, innovative technology and pharmaceuticals can help alleviate the problem.
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Courtesy: Shutterstock

Ask almost anyone who calls Dallas home to name what they love about our city, and there are likely a slew of positive assets that both locals and transplants alike will point to. Endless entertainment options, an innovative food scene, and unprecedented access to the arts are just a few attributes that make Dallas shine. We also pridefully showcase national and international headlines that label Dallas as a beacon for business, shedding light on our opportunity and qualified, skilled workforce.

However, as cost pressures continue to rise all over, residing in a fast-growing city like Dallas can be overwhelming to the budgets of both families and individuals, where the cost of living and price of necessities such as healthcare are top of mind for many in our community.

Local data offers some additional insight. The area home price index for DFW has increased 45.9 percent from 2020 to 2022. Furthermore, the average person buying the average house and driving the average used car in Dallas is seeing their costs increase $18,915 per year for these two items since the start of 2020 — a 91.6 percent change! The fact that the annual inflation rate for the U.S. was 8.2% for the 12 months that ended September 2022 is certainly no help either.  

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Charisse Vaughn (Courtesy: Holmes Murphy)

Over the last three decades, healthcare inflation has generally outpaced the Consumer Price Index (CPI), but in the most recent months, there has been a spike in inflation that hasn’t been reflected in healthcare. Unfortunately, industry analysis and expert forecasts predict a spike in healthcare costs is inevitable. An analysis of CPI and medical trends from 1990 to 2022 predicts a two-year lag between the impact of CPI on medical costs.

Still, with economic stories and analysis abound over the past year, it seems that the affordability of healthcare has moved out of the spotlight in some ways. Of course, this doesn’t mean Dallas residents are not still feeling the impact. In fact, many Americans struggle to afford quality care. According to the West Health-Gallup 2022 Healthcare in America Report, more than one-quarter of adults in America report that if they needed access to quality care today, they would not be able to afford it.

Rising deductibles and out-of-pocket limits continue to pose a problem, and those who are paying such a large share through payroll deductions and plan cost-sharing can be left with a minimal budget remaining.

With that in mind, it can be hard for many employers to grasp the real economic pressures their employees are feeling. Changes in prices for essentials such as gas and groceries are hard to escape from, let alone those who are planning for large purchases such as a house or a car. Due to these changes, employers could find themselves in a situation where their workforce leaves to seek more money or a more substantial benefits package. To help offset this, local companies should be diligent and more creative than ever to eliminate waste and provide real value in their health plans.

Fortunately, there are constantly new innovations that help combat the ever-increasing cost of healthcare. Solutions range from assisting patients with accessing care more efficiently and effectively to new insurance financing solutions.

One of these newer options includes biologic specialty medications, or drugs that involve living tissue and complex molecules that are not easily or directly replicable from one manufacturer to another. Because of this, they do not typically have a “generic component.” Competing products to originator products are called biosimilars because they are therapeutically equivalent to the originator product and considered similar, not the same.

In the U.S., when biosimilars are launched, there is a dual effect: (1) it reduces the costs of all biosimilars for the originator product in the market, and (2) it reduces the costs of the originator product. In both cases, price drops have on average been 10 to 20 percent.

Another important innovation is the rise of telemedicine. Per Holmes Murphy data and within our portfolio of clients, telemedicine visits showed more than a 7x increase in the past few years, and a 9x increase in the type of office visits being virtual versus in-person since 2019.

While telemedicine may not be a “cure all” for any situation where healthcare is needed, it shouldn’t necessarily be discounted for times where it has helped provide needed access to care, especially in areas of increased demand, such as mental health services. For example, mental health visits among our Holmes Murphy client portfolio have increased 24 percent in the past few years, along with a 21 percent increase in costs. These virtual services are often a convenient and cost-saving way to receive quality care.

Overall, it’s a must to examine and reexamine what is being offered in employee benefits and healthcare, and often. Keeping these points in mind, with a focus on innovation and new solutions, we can foster a genuine and healthy working relationship as we navigate these challenging times.  

Charisse Vaughn is a senior vice president of employee benefits at insurance brokerage Holmes Murphy in Dallas.

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