Employer-Sponsored Health Plans Survey Highlights Cost Drivers and Affordability Solutions

ANN GARGIS, PRINCIPAL
412.660.4755
ANN.GARGIS@MERCER.COM
MERCER’S
NATIONAL SURVEY OF
EMPLOYER-SPONSORED
HEALTH PLANS 2018

1
Oldest
Marking 33 years of
measuring health plan
trends
Largest
2,409 employers
participated in 2018
Statistically valid
Based on a probability
sample of private and
public employers for
reliable results
Includes employers of
all sizes, all
industries, all regions
Results project to all US
employers with 10 or
more employees
Most comprehensive
Extensive questionnaire
covers a full range of
health benefit issues and
strategies
Employer size groups in
this presentation
Small: 10–499 employees
Large and midsized: 500+
Jumbo: 20,000+
A B O U T M E R C E R ’ S N AT I O N A L S U R V E Y O F
E M P L O Y E R - S P O N S O R E D H E A LT H P L A N S
MERCER NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS
Copyright 2018 Mercer (US) Inc. All Rights Reserved.

S U R V E Y
H I G H L I G H T S A N D
I N S I G H T S

3
M A C R O T R E N D S S H A P I N G T H E H E A LT H B E N E F I T
E N V I R O N M E N T T O D AY
As plan designs
shift cost to
employees, some
struggle to
afford the
healthcare they
need
New solutions are
flooding onto the
market – but
employee
engagement
remains elusive
Market
consolidation and
expensive new
drugs and
treatments are
driving cost
Employers are
willing to use
smaller networks
and incentives to
steer care to
quality
providers.

4
H E A LT H C A R E I N T H E L I M E L I G H T
B U T D I V I D E D C O N G R E S S W I L L
P R E C L U D E M A J O R C H A N G E S
• ACA Cadillac tax Full repeal a top priority for employers
• ACA employer mandate Long odds for repeal, but push may
lead to simplified employer reporting
• Out-of-network “surprise” medical bills Coming legislation
could raise employer costs, complicate plan design
• HSA reforms Employers pursuing pre-deductible coverage of
non-preventive services; higher contributions; more flexibility
• Drug prices With ban on “gag clauses” enacted, speeding
generics to market may be next; Administration taking regulatory
action to address prices
• “Medicare for All”, Medicare buy-in, public plan options
Democrats hope to build support for some form of single-payer
system with hopes of gaining the White House in 2020
Mercer actively
advocates on behalf of
employers for:
► Repeal of excise tax
and maintaining the
employee tax
exclusion
► HSA expansion
► Greater transparency
and competition
► Support for value-
based care and quality
initiatives

5
* Projected
Source: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1993-
2018; Bureau of Labor Statistics, Seasonally Adjusted Weekly Earnings from the Current Employment Statistics Survey (April to April) 1993-2018.
EMPLOYER S H ELD H EA LTH B EN EFIT C OST GR OW TH
TO 3.6% IN 2018 – BUT THAT’S STILL ABOVE CPI
CHANGE IN TOTAL HEALTH BENEFIT COST PER EMPLOYEE
COMPARED TO CPI, WORKERS’ EARNINGS
8.0%
-1.1%
2.1%
2.5%
0.2%
6.1%
7.3%
8.1%
11.2%
14.7%
10.1%
7.5%
6.1% 6.1%6.1%
6.3%
5.5%
6.9%
6.1%
4.1%
2.1%
3.9% 3.8%
2.4%
2.6% 3.6%
4.4%*
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Annual change in total health benefit
cost per employee
Workers' earnings
Overall inflation

66
S P E C I A LT Y D R U G C O S T H A S S L O W E D S L I G H T LY
B U T C O N T I N U E S T O D R I V E U P O V E R A L L R X C O S T
AVERAGE ANNUAL CHANGE IN PRESCRIPTION DRUG BENEFIT COST PER EMPLOYEE, AMONG
EMPLOYERS WITH 500 OR MORE EMPLOYEES
6.3%
5.1% 5.2%
5.5% 5.4%
8.0%
7.4% 7.6%
6.5%
6.9%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
* Projected
Growth in cost for specialty drugs: 11.9%, down from 15.4% last year
*

77
S M A L L E R E M P L O Y E R S W E R E H I T W I T H
A 5 . 4 % I N C R E A S E I N 2 0 1 8
AVERAGE TOTAL HEALTH BENEFIT COST PER EMPLOYEE
$12,229
$11,527
$12,615$12,666
$12,148
$13,018
$5,000
$6,000
$7,000
$8,000
$9,000
$10,000
$11,000
$12,000
$13,000
$14,000
All employers Employers with
10-499 employees
Employers with
500 or more employees
2017
2018
+3.6% +5.4% +3.2%

8
B U T C O S T E X P E R I E N C E VA R I E D W I D E LY A M O N G
E M P L O Y E R S O F A L L S I Z E S I N 2 0 1 8
27%
31%
24%
18%
PERCENT OF EMPLOYERS WITH SPECIFIED CHANGE IN TOTAL HEALTH PLAN COST*
32%
17%22%
29%
22%
47%
22%
9%
Employers with 10-499 employees
Employers with 20,000+ employees
Employers with 500+ employees
*Based on employers providing cost for both 2017 and 2018
Cost
increased
more than
10%
Cost
increased
by 6–10%
Cost
increased
by 5% or less
No change in
cost or cost
decrease

9
21%
< Age 30
32%
Age 60+
Very Confident Somewhat Confident Not Confident
C O S T G R O W T H I S A N I S S U E F O R E M P L O Y E E S , W H O
N O W PAY 2 5 % O F T H E C O S T O F C O V E R A G E
RELATIVELY FEW EMPLOYEES ARE COMPLETELY CONFIDENT THEY CAN AFFORD THE COST OF
SERVICES THAT INSURANCE DOESN’T PAY – YOUNGER EMPLOYEES LEAST OF ALL
Oliver Wyman 2018 Consumer Survey of US Healthcare

10
EMPLOYER S’ TOP PR IOR ITIES FOR TH E
N EXT 5 YEA R S: A D D R ESS C OST D R IVER S
A N D H ELP EMPLOYEES TH R IVE
18%
18%
40%
39%
50%
30%
30%
28%
37%
29%
% employers rating
strategy “Very
important”
% employers rating
strategy “Important”
Improving patient empowerment through advocacy, shared
decision-making, multi-channel navigation, etc.
Focused action to manage cost for specialty pharmacy
Monitoring and managing high-cost claimants
Focused strategies for behavioral health
Focused strategy for creating a culture of health

11
T H E B U S I N E S S C A S E F O R
A T H R I V I N G W O R K F O R C E
THRIVING EMPLOYEES ARE LESS COSTLY AND MORE PRODUCTIVE
A THRIVING ORGANIZATION STARTS WITH THRIVING INDIVIDUALS
Source: Gallup’s State of the American Workplace study
41%
Lower
heath costs
31%
Lower
turnover
31%
Higher
productivity
ORGANIZATION
Success Redefined
Resilient and Agile
Positive Societal
Impact
WORKFORCE
Diverse & Adaptive
Inclusive & Growth-Focused
Committed to Well-being
(psychological, physical,
financial)
INDIVIDUAL
Growing &
Contributing
Empowered &
Connected
Healthy & Energized

U S I N G C H O I C E
T O B O O S T
A F F O R D A B I L I T Y
B E C AU S E O N E S I Z E R AR E LY F I T S AL L

13
E M P L O Y E E O U T - O F - P O C K E T C O S T S H AV E G R O W N
FA S T E R T H A N P L A N C O S T, E S P E C I A L LY A M O N G
S M A L L E M P L O Y E R S
AVERAGE PPO DEDUCTIBLE FOR INDIVIDUAL, IN-NETWORK COVERAGE
$1,113
$1,192
$1,410 $1,452
$1,663 $1,681 $1,738
$1,805
$1,917
$2,023
$511 $565 $587
$666 $684
$785 $833 $883
$966 $982
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

14
A T H I R D O F C O V E R E D E M P L O Y E E S
A R E N O W I N L O W - C O S T C D H P P L A N S
PERCENTAGE OF COVERED EMPLOYEES ENROLLED IN ACCOUNT-BASED
CONSUMER-DIRECTED HEALTH PLANS
3%
5%
7%
9%
11%
13%
16%
18%
23%
25%
29% 30%
33%
0%
5%
10%
15%
20%
25%
30%
35%
40%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

15
W H AT H A P P E N S W H E N A N E M P L O Y E E M O V E S
F R O M A P P O I N T O A N H S A - E L I G I B L E P L A N ?
HSA-eligible plan
Premium savings and employer HSA contributions can help offset
the higher deductible. But that’s not enough for all employees.
$4,000Median in-network OOP max $3,000
$2,176 but subtracting the average employer
HSA contribution of $560 (including zeros) lowers
that to $1,616
Average deductible $982
82%Average Actuarial Value 87%
19%Average contribution as % of premium 24%
$93Average monthly contribution $156
Employee-only coverage in… PPO plan

16
E M P L O Y E R S A D J U S T H S A P L A N D E S I G N – B U T
R E M A I N C O M M I T T E D T O P R O V I D I N G O T H E R C H O I C E S
2017 2018
Employee cost sharing (employee-only coverage)
Average individual deductible $2,077 $2,176
Average OOP maximum $3,900 $4,072
Monthly contribution for individual coverage $83 $93
Employer contribution to HSA (employee-only)
Percent of employers contributing to account 77% 82%
Average annual contribution, when provided $653 $689
Have other enrollment choices?
HSA-eligible CDHP is only plan available to those enrolled
(% of HSA sponsors)
14% 11%

17
H S A - E L I G I B L E C D H P s C O S T L E S S T H A N
O T H E R P L A N S – W H I C H M E A N S
E M P L O Y E E S K E E P M O R E O F T H E I R
PAY C H E C K S
AVERAGE MEDICAL PLAN COST PER EMPLOYEE
$12,486
$11,580
$10,357
$10,826
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
PPO HMO HSA-eligible CDHP PPO with deductible
of $1,000 or more

18
E M P L O Y E E S A R E D I V I D E D O N H O W T H E Y WA N T T O
PAY T H E I R P O R T I O N O F I N S U R A N C E C O S T
MORE FROM THEIR PAYCHECK, OR MORE AT THE POINT OF SERVICE? AGE MAKES A DIFFERENCE
65%
< Age 30
45%
Age 60+
More from paycheck,
less at point of service
Less from paycheck,
more at point of service
Oliver Wyman 2018 Consumer Survey of US Healthcare

19
M E A N I N G F U L C H O I C E I S VA L U E D B Y E M P L O Y E E S
Richest
Option
30%
2nd
Richest
30%
Middle
23%
2nd
Leanes
t
13%
Leanest
Option
2%
FIVE OPTIONS
PERCENTAGE OF ELIGIBLE EMPLOYEES SELECTING EACH MEDICAL PLAN OPT ION
Richest
Option
33%
2nd
Richest
24%
2nd
Leanes
t
28%
Leanes
t
Option
15%
FOUR OPTIONS
Rich
Option
46%
Middle
Option
33%
Lean
Option
21%
THREE MEDICAL PLAN
OPTIONS
Source: 2018 Mercer Marketplace 365 enrollment results; standard deductible options only
(excludes limited medical, Hawaii, Puerto Rico, HMOs and custom options)
Even with five levels of plan richness
to select from, a significant number of
employees select each option.

20
When VB and
core benefits are
integrated
41%
When VB and core
benefits are NOT
integrated
26%
Overall37%
OFFER VOLUNTARY
BENEFITS THAT
SUPPLEMENT A HIGH-
DEDUCTIBLE PLAN
63%
61%
Accident
Hospital
indemnity
26%
20%
Cancer/
critical illness
58%
51%
72%
65%
EMPLOYER S A R E A D D IN G VOLU N TA RY B EN EFITS TO
MAKE HIGH - DEDUCTIBLE PLANS AN EASIER CHOICE
Individual disability
39%
42%
VOLUNTARY BENEFITS ARE
INTEGRATED WITH CORE
BENEFITS ON THE SAME
ENROLLMENT PLATFORM
% ELIGIBLE EMPLOYEES
ENROLLING IN VOLUNTARY
BENEFITS PROGRAM
2018 2017

21
M O R E E M P L O Y E R S C O N S I D E R I N G B U N D L E D S O L U T I O N S
A S A W AY T O O F F E R C H O I C E A N D A H I G H - T E C H
P L AT F O R M
58%
9%
33%
71%
11%
18%
Employers with 20,000+ employees
75%
11%
13%
Not
considering
Currently use
or plan to use
by 2020
Considering
within 5
years

F U T U R E - F O C U S E D
S T R A T E G I E S
L O O K I N G B E Y O N D C O S T -
S H I F T I N G F O R S O L U T I O N S T H A T
B E N E F I T E V E R Y O N E

23
M E R C E R ’ S V I TA L S F O R C H A N G E
STRATEGIES TO REIN IN COST AND DRIVE POSITIVE
HEALTHCARE CHANGE – WITHOUT COST SHIFTING
Data +
analytics
Deliver the right
care at the right
time, in the
right setting,
error free
DRIVE TO
QUALITY
Leverage data
& technology to
help employees
make better
healthcare
decisions
PERSONALIZE
THE EXPERIENCE
Align
reimbursement
with value,
not volume
PAY FOR
VALUE
Examine
traditional and
emerging
opportunities
with an
open mind
EMBRACE
DISRUPTION
Data & Analytics

24
Maximum score: 400
National benchmark: 154
Scores will be low in first few years
– by design. The Scorecard was
created to introduce new ideas.
As the database grows,
benchmarks by size, industry and
geography will become available.
Your score: XXX
T H E V I TA L S F O R C H A N G E S C O R E C A R D
R E C E I V E Y O U R S C O R E I N S T A N T L Y A N D S T A R T S T R A T E G I Z I N G
Just by taking the Scorecard, you’ll learn about
new ideas/innovations with meaningful potential
An inventory of new ideas
Identify opportunities – many of which are only
now actionable for most employers – and
strategize about which hold the greatest
potential for your organization
A platform for action
Benchmark yourself against employers in two
size groups – and track progress over time
A source of benchmark data
Results
Copyright © 2018 Mercer (US) Inc. All rights reserved.

25
E M P L O Y E E S H AV E AC T I V E C H O I C E AT O P E N
E N R O L L M E N T TO S E L E C T P R O V I D E R
N E T W O R K S F O R VAL U E - B A S E D C AR E
500+
employees
20,000+
employees
Tiered network
Cost-sharing is lower for a subset of the broad provider
network selected for quality / cost-efficiency, but the full
network is available
14% 17%
Narrow network
Coverage is limited to a subset of the broad provider
network selected for quality / cost-efficiency
5% 14%
ACO network
Coverage is limited to one local, integrated healthcare
delivery system
2% 12%
Fully capitated HMO 12% 25%

2626
G I V I N G E M P L O Y E E S A C C E S S T O C E N T E R S O F
E X C E L L E N C E – A N D E N C O U R A G I N G T H E I R U S E
34%
38% 39% 39% 37%
30%
25%
10% 9% 9%
7%
14%
0%
10%
20%
30%
40%
50%
60%
70%
Transplants Oncology Orthopedics Cardiology Women's health
(infertility /
pregnancy)
Bariatric surgery
Require employees to use COE or steer with plan
design differential
No active steerage beyond communication

27
15%
38%
47%
S U R G I C A L T R E AT M E N T
D E C I S I O N S U P P O R T S E R V I C E S
EMPLOYERS WITH 20,000 OR MORE EMPLOYEES
Offer and provide
incentive to use
Offer without
an incentive
Do not
offer
P O S I T I V E R E S U L T S
A M O N G T H O S E
O F F E R I N G
Lower incidence of
some procedures
23%
Greater use of Center
of Excellence
18%
Better quality
outcomes (fewer
complications)
26%
No positive benefits 3%
Not able to measure 54%

28
P L A N M E M B E R S A R E E N C O U R A G E D
T O U S E A S P E C I A LT Y P H A R M A C Y
21%
21%
14%
55%
49%
12%
12%
32%
500+ employees
20,000+ employees
Offer lower cost-sharing if employees use the specialty pharmacy
Some / all specialty drugs excluded from retail
pharmacy / medical benefit
Encourage use of specialty pharmacies some other way
Do not attempt to steer members to any channel for specialty medications

29
MEDICAL
REBATE
MANAGEMENT
Savings varies
based on
current contract
SPECIALTY PBM
CARVE-OUT
10%+ Savings
SITE OF CARE
OPTIMIZATION
3–8% Savings
THERAPEUTIC
CLASS
CARVE-OUT
Savings up to 10%
SPECIALTY
DIAGNOSTIC
Savings identification
Intensity
M A N A G I N G S P E C I A LT Y P H A R M A C Y
S P E N D I N G : A C O N T I N U U M O F
A P P R O A C H E S

30
O F F E R O N E O R M O R E P O I N T
S O L U T I O N S
Through a specialty vendor
outside the health plan
12% Have access to
programs offered
through bundled
solution or digital
navigation partner
3%
Not offered
44%
Through the
health plan
46%
Point solutions are
hyper-focused niche
solutions offered by
new entrants or
established health
vendors looking to fill
gaps. They target
different aspects of the
health experience:
-Chronic conditions
-Lifestyle change
-Program
engagement
-Access to specific
health services

© MERCER 2017 31
Musculoskeletal 7%
Back 4%
Osteoarthritis 4%
Heart 7%
Diabetes 3%
Hypertension 1%
Overweight/Obesity 1%
Maternity 7%
Cancer 7%
Mental Health 6%
Other Chronic 4%
COPD/Asthma 1%
Other 48%
S O M E P O I N T S O L U T I O N S T H A T A D D R E S S T H E T O P
C O N D I T I O N S B Y S P E N D

32
G R O W T H I N O F F E R I N G S O F
T E L E M E D I C I N E S E R V I C E S C O N T I N U E S
18%
30%
59%
71%
80%
2014 2015 2016 2017 2018
T E L E M E D H A S P O T E N T I A L , B U T
U T I L I Z AT I O N R E M A I N S L O W
Among employers with a telemedicine program in use in 2017,
utilization averaged 8% of eligible employees
65%
Offer telemed
through the health
plan
16%
Offer through a
specialty vendor
$30
Median copay
18%
Report utilization >10%

33
P R O V I D E E N H A N C E D H E A LT H
A D V O C A C Y S E R V I C E S
Offer additional services
through a specialty
vendor
21%
Carve out customer
service from health
plan to a specialty
vendor
2%
Only offer health plan's
standard customer
service
64%
Offer plan's enhanced
customer service model
14%
In an enhanced
advocacy program,
the advocate assists
the member with
finding providers,
care coordination,
post-treatment
follow-up, claims
issues, and more

34
B E N E F I T S O F O F F E R I N G E N H A N C E D
H E A LT H A D V O C A C Y S E R V I C E S
37%
12%
11%
15%
17%
19%
46%
Other benefits
Higher use of high-quality providers
No benefit seen yet
Lower cost or cost trends
Increased participation in health improvement programs
Better management of high-cost claimants
Higher employee satisfaction

C R E A T I N G A
C U L T U R E O F
H E A L T H
H E L P E M P L O Y E E S T H R I V E –
A N D L O V E W H E R E T H E Y W O R K

36
WHAT COMPANIES OFFERWHAT EMPLOYEES CRAVE
13%
EVP differentiated by having a
purpose-driven mission
75%
Thriving employees are 3x times more
likely to work for a company with a
strong sense of purpose…
21%
Practice some form of
internal pay disclosure
81%
And nearly 5x more likely
to believe they are paid
fairly & competitively
28%
Offer a career
management/pathing tool
14%
Have health & well-being as a
talent management priority this year
75%
10x more likely to feel
career-empowered
77%
3x more likely to say their
workplace focuses on
health & well-being
D O E S Y O U R T O TA L R E WA R D S P R O G R A M G I V E
E M P L O Y E E S W H AT T H E Y R E A L LY WA N T ?
MERCER GLOBAL TALENT TRENDS 2018 STUDY

37
M O R E E M P L O Y E R S TA K I N G S T E P S T O B U I L D A
“ C U LT U R E O F H E A LT H ”
25%
39%
42%
45%
57%
63%
23%
23%
43%
42%
54%
59%
2017 2018
Modified physical work environment to
promote health and well-being (including
Well Building standard)
Healthy food choices in cafeteria,
company meetings or events
No smoking anywhere on work campus
Have policies to promote
healthy work/life balance
Offer onsite fitness facility
Company vision/mission statement
supports a healthy workplace culture

38
U S I N G T E C H N O L O G Y - B A S E D
R E S O U R C E S T O E N G A G E E M P L O Y E E S
44%
27%
10%
54%
40%
16%
Mobile applications Wearables / apps to
monitor activity
Devices to transmit
health measures
500+ employees
20,000+ employees

39
G R O W I N G F O C U S O N B U I L D I N G
I N T R I N S I C M O T I VAT I O N F O R
E N G A G E M E N T I N W E L L - B E I N G
EMPLOYERS WITH 500 OR MORE EMPLOYEES OFFERING WELL-
BEING PROGRAMS
12%
36%
52%
Intrinsic
motivation and
financial
rewards are both
important
Intrinsic
rewards not
a focus of
engagement
strategy
Examples of
intrinsic
motivation include
a sense of
accomplishment,
recognition, social
involvement, or a
connection to a
cause
Intrinsic motivation
becoming more
important relative to
financial rewards

40
Offer financial
resources
through a
specialty vendor
45%
41%
Offer through the
health plan
12%
11%
OFFER SUPPORT FOR
MENTAL HEALTH AND
SUBSTANCE ABUSE ISSUES
48%
40%
Mindfulness
Stress
management
79%
75%
Tele-therapy
52%
42%
61%
E M P L O Y E R S A R E A D D I N G P R O G R A M S T O S U P P O R T
M E N TA L H E A LT H A N D F I N A N C I A L W E L L N E S S
Resiliency
42%
39%
HAVE TAKEN STEPS TO
ADDRESS MENTAL
HEALTH PARITY
OFFER FINANCIAL TOOLS,
ADVICE OR GUIDANCE
(OTHER THAN FOR
RETIREMENT)
2018 2017

41
M A N Y E M P L O Y E R S H AV E TA K E N
S T E P S T O A D D R E S S O P I O I D
A B U S E , B U T O T H E R S D O N ’ T S E E
I T A S A P R I O R I T Y
5%
16% 16%
28%
44%
Added employee
health services
Made changes to
health plan
design to
address it
Employee
communications /
education
Planning to take
action within the
next two years
Not a priority
►Prevention. Push medical
and dental plans to
monitor the prescribing
behavior of network
providers, and PBMs to use
evidence-based
formularies.
►Identification and
harm mitigation. Plan
design should support
screening patients for
substance use disorder and
quick access to medication-
assisted treatment and
other services needed.
►Treatment. Steer
individuals to high-quality,
in-network treatment
facilities through advocacy
programs and/or a well-
integrated EAP .
►Supported return to
work. More deliberate
return to work programs
and recovery support
services can minimize the
risk of relapse.
Four areas in which
employers can exert a
positive influence:

42
U S E A N I N T E G R AT E D P L AT F O R M F O R
A L L H E A LT H A N D W E L L - B E I N G
P R O G R A M S / V E N D O R S
20%
14%
20%
24% 24%
26%
0%
5%
10%
15%
20%
25%
30%
All programs/vendors can
be accessed through one
integrated platform
Have begun to integrate
programs/vendors
Considering an integrated
platform
500+ employees
20,000+ employees
Accessing all
programs in one
location – a “health
engagement hub” --
makes the
experience more
immediate and
personalized,
building employee
engagement

43
M E AS U R I N G T H E VAL U E O F I N V E S T M E N T I S
C H AL L E N G I N G , B U T M O S T T H AT D O
M E AS U R E R E P O R T P O S I T I V E R E S U LT S
AMONG EMPLOYERS OFFERING WELL-BEING PROGRAMS
500+
EMPLOYEES
20,000+
EMPLOYEES
Have not measured 67% 51%
Have measured, and found:
Positive impact on medical trend 14% 27%
Improved productivity or business outcomes 7% 14%
Higher employee engagement scores 15% 17%
Improved attraction and retention 9% 12%
No positive impact seen so far 8% 11%

I N N O V A T I O N
T H A T A I M S F O R
S U S T A I N A B L E
C O S T … A N D M O R E
N E W C H A L L E N G E : C R A C K I N G T H E C O D E O F
E N G A G E M E N T B Y D E S I G N I N G H E A LT H B E N E F I T S
F R O M T H E I N S I D E O U T

4545
B E S T- P R A C T I C E C H E C K L I S T F O R
L O W E R C O S T G R O W T H
RESPONDENTS’ COST TRENDS WERE ANALYZED BASED ON THEIR USE OF
THESE 27 BEST PRACTICE COST-MANAGEMENT STRATEGIES
BASICS WELL-BEING QUALITY AND VALUE
✓ Offer CDHP
✓ HSA sponsor makes a contribution
to employees’ accounts
✓ Offer voluntary supplemental
health insurance
✓ Use bundled solution for health
benefits (including private benefits
exchange)
✓ Use stop-loss insurance
✓ Mandatory generics or other
Rx strategies
✓ Steer members to specialty
pharmacy for specialty drugs
✓ Collective purchasing of Rx
benefits
✓ Offer one or more point solutions to
address population health issues
✓ Company vision/mission statement
supports a healthy workplace culture
✓ No smoking on work campus
✓ Offer technology-based well-being
resources (apps, devices,
web-based)
✓ Use incentives for well-being
programs
✓ Well-being strategy focuses on
intrinsic motivation to improve health
✓ Spouses and/or children may
participate in programs
✓ Smoker surcharge
✓ Have taken action to address opioid
abuse/addiction in the workplace
✓ Provide teletherapy, stress mgmt,
resiliency, or mindfulness programs
✓ Offer enhanced health advocacy
✓ Offer a Center of Excellence for
bariatric, oncology, cardiology,
orthopedics or women’s health
✓ Steer employees to a COE with
incentive/penalty, or require it
✓ Provide incentive to use surgical
decision support service
✓ Primary care on-site clinic
✓ Telemedicine utilization of 6%+
✓ Use enhanced fraud, waste and
abuse approaches
✓ Use predictive analytics in setting
health plan strategy
✓ Employees have option at open
enrollment to elect:
– Tiered or narrow network
– Accountable care organization
– Fully capitated HMO

46
AV E R A G E C O S T I N C R E A S E B A S E D O N
N U M B E R O F B E S T P R A C T I C E U S E D
AVERAGE INCREASE IN TOTAL HEALTH BENEFIT COST IN 2018, AMONG
5.0%
4.4%
3.8%
3.2%
0-7 best practices 8-10 best practices 11-13 best practices 14+ best practices
Respondents were divided into 4 roughly equal groups
(quartiles) based on how many best practices they used
Based on unweighted data.

47
W I D E N I N G G A P I N P E R F O R M A N C E
B A S E D O N U S E O F B E S T P R A C T I C E S
AVERAGE ANNUAL INCREASE IN TOTAL HEALTH PLAN COST, AMONG
3.7%
2.9%
3.8%
2.7%
3.2%
4.3%
3.8%
4.8%
4.2%
5.0%
2014 2015 2016 2017 2018
Employers using the most best practices
Employers using the fewest best practices

48
T U R N O V E R I S L O W E R A M O N G
E M P L O Y E R S T H AT D O T H E M O S T T O
P R O M O T E W E L L - B E I N G
AVERAGE TURNOVER RATE IN 2017, AMONG EMPLOYERS WITH 500 OR
MORE EMPLOYEES
30%
21%
19%
0–3 well-being best
practices
4–5 well-being best
practices
6 or more well-being best
practices

49
W E L L - B E I N G F O C U S I S A S S O C I AT E D
W I T H L O W E R T U R N O V E R A C R O S S
I N D U S T R I E S
AVERAGE TURNOVER RATE IN 2017 AMONG EMPLOYERS WITH 500 OR
MORE EMPLOYEES
62%
40%
28%
21%
18%
43%
23%
18%
16% 15%
Wholesale/Retail Services Health care Manufacturing High Tech
Employers using fewest well-
being best practices
Employers using most well-
being best practices

50
POPULATION
HEALTH
PLAN DESIGN NETWORKS AFFORDABILITY
E M P L O Y E R D R I V E N H E A LT H T R A N S F O R M AT I O N
DESIGNING FOR THE CONSUMER OF TOMORROW
Perceived value
Personalized
steerage
Address social
determinants of
health
Stratified focus on
health needs
Convenience
High-cost focus
“Those programs
aren’t for me”
“Wow that is so easy”
“I know exactly what
to do and where to
go”
“I have the resources
I need to get healthy
or stay healthy”
“I don’t have to stress
about the basics –
now I can focus on
my health”
Soft Steerage
“Where do I go for
care?”
Broad access
“I have other things
to worry about”
Imperfect wage-
based
contributions
Actuarial Value
Total Cost of
Care
Today’s
Design
Elements
Design
Philosophy for
Tomorrow
“I don’t understand
why our benefits get
worse each year”

51
D E S I G N I N G F O R T O M O R R O W :
A R O A D PAV E D W I T H D ATA
THE RIGHT DATA WITH THE RIGHT STRATEGY WILL YIELD
EXPONENTIAL INSIGHTS, WINNING THE TRUST OF CONSUMERS
Exponential
Value
A race to capture and harness
the value of unstructured data
from diverse sources to paint
a fuller picture than claims or
labs can ever provide
Continued Competition
Industry grapples for control of
the data, recognizing the
business value; who will
emerge the victor?
Consumers
Considerations
While many consumers find
value in personalized and
simple experiences,
establishing trust is key
To deliver a benefits experience that rivals the
consumer experience of a Netflix or Amazon,
you need to use similar data
To maximize the value of your programs, your
vendors must agree to share data transparently
among all ecosystem partners
It’s time to re-evaluate how your data is
used
It’s time to re-evaluate what data your
organization uses

52
E M P L O Y E R S A R E J U S T S TA R T I N G T O
U S E D ATA A N A LY T I C S T O E N H A N C E
H E A LT H P R O G R A M S T R AT E G Y
14%
18%
58%
64%
7%
14%
57%
16%
500+ employees
20,000+ employees
Expect to use predictive analytics within three years
Use predictive analytics in setting health plan strategy now
Receive the data we need to drive strategy from all health partners
Use a data warehouse

53
S H I F T I N G T O D AY, S H A P I N G T O M O R R O W
TRANSFORMING FROM THE INSIDE, OUT
Through the Vitals for Change, employers are able to
construct a strategy to drive change in the external market
…but employers must also look inward, to the people who make up their organization
DRIVE TO
QUALITY
PERSONALIZE
THE EXPERIENCE
PAY FOR
VALUE
EMBRACE
DISRUPTION
Data & Analytics Data & Analytics Data & Analytics Data & Analytics
Redesigning the experience with the
consumer in mind will yield
healthier, more productive
employees, and better business
outcomes

Employer-Sponsored Health Plans Survey Highlights Cost Drivers and Affordability Solutions

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