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Roughly half the U.S. population is covered under health plans sponsored by large employers. That puts these organizations in a powerful position to demand increased consistency and value from the health care system, starting with their local markets. Through provider network optimization, employers finally have a practical approach to understanding their local health care ecosystems and engaging in strategies that drive their employees to lower cost providers that truly deliver quality care. Through this new level of transparency and insight, proactive employers are empowered to make intelligent decisions on how to guide their people to the best quality care at competitively priced facilities.
Innovative new benefits, like pet insurance, adoption cov-erage and volunteer time off, have garnered attention as employers seek creative ways to reward and retain valued employees. Yet it's one of the oldest benefits that is consistently responsible for keeping benefits managers awake at night: health care. Rapidly increasing health care costs, continually evolving delivery system models and an uncertain health care landscape have kept the challenges associated with employer-sponsored health care squarely at the forefront of their minds.
Employers have spent the last four decades trying to contain the cost of the health coverage they provide to employees. Along the way, they have seemingly exhausted every possible avenue for paring back costs-or at least putting the brakes on the constant escalations. From health maintenance organizations (HMOs) and preferred provider organizations (PPOs) to consumer-directed health plans (CDHPs), health savings accounts (HSAs) and private exchanges, employers have embraced one strategy after another in the hopes of reining in health care costs.
While each approach brought its own set of advantages, none has emerged as the standalone, single-bullet solution employers have long been seeking. Even for benefit programs that have been successful at taming utilization in recent years, costs have continued marching forward due to medical and pharmacy unit cost increases.
Unfortunately, employers don't enjoy the same luxury as Medicare which, as the biggest payer in the market, has the power to dictate how much it will pay for specific procedures year over year. In the 1990s and 2000s, employers paid an average of 20-30% more than Medicare for any given medical expense. Since 2010, this gap has been rapidly expanding, and the unit...