The talent market today is challenged by the continuing COVID-19 pandemic; record levels of attrition; increased focus on diversity, equity, and inclusion; and rising healthcare costs that outpace inflation. In this environment, employers tell us that they are trying to simultaneously expand benefits and manage healthcare costs.
The results of our latest Employer Health Benefits Survey reveal the following:
- With record numbers of employees leaving their jobs, the “Great Attrition” is putting pressure on employers and raising their awareness of the importance of employee health benefits.
- Employers offer a variety of voluntary benefits to bolster talent acquisition and retention efforts, and they view these efforts as increasingly important.
- Employers perceive cost as relatively less important when selecting benefits carriers versus five years ago, despite continued rising costs.
- Employers continue to perceive high-deductible health plans as a viable option for managing rising medical costs, and they are increasingly satisfied with this option.
- Employers are increasingly interested in benefits solutions that include components—for example, health management and member advocacy—that simultaneously improve member satisfaction and help manage costs. This balanced approach is likely to endure after the pandemic ends.
Because employer benefits decisions have a substantial influence on healthcare delivery, insurance and health service markets, and the overall economy, McKinsey has conducted a US Employer Health Benefits Survey regularly since 2011. The survey provides a longitudinal view of the employer benefits landscape, including changes in offerings and funding across health benefit categories. It also examines employers’ use of and satisfaction with benefits providers and offerings. The data and insights gleaned from the survey can inform strategic decisions by participants in the employee benefits ecosystem—brokers, consultants, carriers, healthcare providers, and service providers—and help them effectively support their clients, patients, and partners.
This article incorporates findings from the most recent survey, which was conducted during September 2021. The survey collected responses from 1,640 employer-benefits decision makers, including C-level executives, human resources leaders, and benefits managers. The survey responses are weighted by employer size and industry to match the whole US economy.
Conclusion
Benefits offerings have historically been an important component of employee acquisition and retention strategies, and research confirms that the structure and extent of offerings are only becoming more critical.1 Employers competing for talent will need to optimize benefit packages to improve member satisfaction while managing costs.
Employers have several tactical and strategic options at their disposal to strengthen the quality of their benefits packages while managing costs such as the following, for example:
- introducing navigation and health management tools to help employees navigate the healthcare system (including, for example, finding providers who offer culturally sensitive care), engage in preventive physical and mental care, and manage chronic conditions2
- engaging in innovative contracting arrangements with healthcare providers, especially for care journeys with higher prevalence for working populations (for example, musculoskeletal, pregnancy, or behavioral health), to provide incentives for improved outcomes and reduced costs3
- ensuring the value of benefits is clearly communicated to employees in simple language, in multiple channels, and year-round, including tools to help employees select and enroll in the benefits package that best meets their needs and helps them manage their out-of-pocket costs
