2021 Plan Design Survey: Employer Perspectives on the Health Care Landscape

COVID-19 had a significant impact on employers’ perspectives on health, helping to strengthen the link between health care strategy and workforce strategy. It also affected planning for 2021.

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August 18, 2020

The 2021 Large Employers' Health Care Strategy and Plan Design Survey solicited information about employer approaches to health care and benefits in the midst of the COVID-19 pandemic, providing a window into leading ways that employers are addressing COVID through their benefit plans, programs and overall workforce strategy outlook.

This part of the report provides a snapshot of employers’ overall concerns in 2020 and beyond. COVID-19 had a significant impact on employers’ perspectives on health, helping to strengthen the link between health care strategy and workforce strategy. It also affected planning for 2021. Demand for virtual care has increased exponentially, a trend that will be discussed in more detail in Part 3. Regarding pharmacy strategy, high-cost drug therapies are employers’ top concern, an area that is covered in Part 4.

Key Takeaways

  • More than ever before, employers see health care strategy as an integral part of their workforce strategy. Forty-five percent of respondents currently hold this view, compared to 36% in 2019. This upward trajectory illustrates a growing appreciation of the importance of employee health and well-being on overall business performance.
  • The COVID-19 pandemic has had a significant impact on how employers view the relationship between their health care strategy and workforce strategy. It also has affected health care planning for 2021.
  • Virtual care was already on the rise but its presence on the health care landscape has grown as a result of COVID-19. Not only have employers increased their offerings this year, they also believe that virtual care is here to stay.

Connection Between Health Care Strategy and Workforce Strategy Continues to Grow

This year, employers continue to see health care strategy as an integral part of their workforce strategy. The survey showed a jump of nine points between 2019 and 2020, increasing from 36% to 45%. The COVID-19 pandemic played a role in this upward trajectory, but it also illustrated another trend: the growing awareness of the link between employee health and well-being and overall business performance.

The Role of Health Care in Large Employers’ Workforce Strategy, 2018-2020 
Figure 1.1: The Role of Health Care in Large Employers' Workforce Strategy, 2018-2020

Impact of COVID-19 on Virtual Care

The COVID-19 pandemic vividly illustrates how an unparalleled event can upend every aspect of health care, including care delivery and innovation, as well as alter employers’ perspectives on their health care strategy. Thirty-eight percent of respondents to this year’s survey said that the pandemic had a very significant or significant impact on how they view the role of their health care strategy on their workforce strategy. A quarter indicated that the pandemic also has had a significant impact on their health care strategy for 2021. 

Impact of COVID-19 on Health Care Strategy, 2021  
Figure 1.2: Impact of COVID-19 on Health Care Strategy, 2021

Changes Driven by COVID-19

What actions have employers taken as a result of COVID-19? Perhaps the biggest change is a significant increase in virtual solution offerings.  Not only have employers made access to virtual health easier, they also have increased the number of choices. Seventy-six percent of respondents said that they made changes to increase access to virtual solutions, and 71% accelerated telehealth and virtual health offerings. Furthermore, 43% added new virtual mental health benefits. 

COVID accelerated our business case to focus on affordability and add in more choice. We’re launching a new plan option next year. Our decision to cover COVID testing and treatment at 100% aligns with our values as a company.


Amy O'Neill, Liberty Mutual Insurance Group

Large Employer Actions Due to COVID-19, 2020 
Figure 1.3: Large Employers Actions Due to COVID-19, 2020
Large Employers’ Approach to Delivery Reform, 2018-2020 
Figure 1.4: Large Employers’ Approach to Delivery Reform, 2018-2020

The urgency of the moment also meant that employers couldn’t wait for normal channels within the delivery system to respond to COVID. For this reason, 24% of employers took matters into their own hands, by circumventing the system to implement virtual solutions – a significant jump from previous years, when only 6% in 2018 and 5% in 2019 went this route. There was a reduction in the percent of employers exclusively relying on implementing alternative payment models as a way to drive delivery system change (from 16% in 2019 to 5% in 2020). Ultimately, about one-third of employers combine both methods – deploying virtual and digital care point solutions while pursuing the implementation of alternative models (see Figure 1.4).

Role of Virtual Care in Health Care Delivery

Employers also do not appear to view this shift to virtual care as a one-off during a difficult year. Eighty percent of large employers believe that virtual care will have a significant impact on how health care is delivered in the future. This is a marked increase from 2018, when 52% of employers believed this to be true. Read more about this important topic in Part 3.

Large Employer Views of Virtual Care, 2018-2020 
Figure 1.5: Large Employers' Views on Virtual Care, 2018-2020

Views on Pharmacy Costs

As employers navigate and respond to the growth of especially high-priced therapies, 80% of respondents think that current tactics in place to finance these drugs do little to control their overall price. This topic is covered in more detail in Part 4. 

As a result, employers see a role for the government to intervene and reduce costs and underlying prices of high-cost therapies, a trend that first became evident last year. In fact, this year, slightly more employers held this position: 50% in 2020 compared to 46% in 2019.

Large Employer Concerns About Controlling Drug Costs through Financing Methods, 2020  
Figure 1.6: Large Employer Concerns About Controlling Drug Costs through Financing Methods, 2020
Employers’ Views on the Government’s Role in Addressing High-cost Therapies, 2019-2020 
Figure 1.7: Employers’ Views on the Government’s Role in Addressing High-cost Therapies, 2019-2020

Policy Perspectives

When it comes to policy, in addition to drug pricing, three other issues that policymakers are considering are on employers’ minds as well: surprise billing, affordability of health care and health savings accounts (HSAs). In all three areas, employers considered a few possible solutions.

To resolve payment disputes for surprise bills, 57% said that setting a benchmark rate based on the local negotiated in-network rate would be the most appropriate approach, followed by 54% who said that setting a benchmark at the Medicare rate or some percentage of it could be effective. Other options came in much lower. Only 11% thought that arbitration between providers was a viable solution, while 7% thought that setting a benchmark rate based on provider charges would help solve the problem. The latter two solutions are likely to be inflationary, while setting a benchmark that references either in-network rates or a percentage of Medicare tends to moderate cost increases and encourage more providers to participate in plan networks.

Although employers are concerned about affordability and the growth in out-of-pocket expenses, they are also concerned that Congress’ focus on limiting out-of-pocket expenses alone could be shortsighted, especially if it is not accompanied by other measures that address overall affordability. Merely limiting out-of-pocket costs could lead to higher cost trends for both employers and employees.  While employers see some value in limiting out-of-pocket costs legislatively, most prefer to see more competition in the market as a way to lower costs and increase affordability.

Large Employers’ Views of Government Solutions to Surprise Billing, 2020 
Figure 1.8: Large Employers’ Views of Government Solutions to Surprise Billing, 2020
Large Employer Views on Legislative Strategies for Limiting Out-of-Pocket Expenses, 2020 
Figure 1.9: Large Employers' Views on Legislative Strategies for Limiting Out-of-Pocket Expenses, 2020

As Congress and the Administration consider changes to HSA rules, employers recommended several improvements, all of which make it easier to cover a particular service before the deductible is met. These services include telehealth, additional treatments for chronic conditions and on-site and near-site clinic services. The first and third options may have been informed by COVID because both have been utilized extensively since the pandemic hit. In the case of on-site and near-site clinics, they have proven to be flexible enough to become virtual when necessary (see Part 3 for more information about this).

Large Employers’ Views on HSA Improvements, 2020    
Figure 1.10: Large Employers’ Views on HSA Improvements, 2020

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TABLE OF CONTENTS

  1. Connection Between Health Care Strategy and Workforce Strategy Continues to Grow
  2. Impact of COVID-19 on Virtual Care
  3. Changes Driven by COVID-19
  4. Role of Virtual Care in Health Care Delivery
  5. Views on Pharmacy Costs
  6. Policy Perspectives