| INTEGRATIVE INSIGHTS ON EMERGING OPPORTUNITIES |
Integrative research means our extensive company research informs every thesis and perspective. The result is deep industry knowledge, expertise, and trend insights that yield valuable results for our partners and clients.
cgreendale@firstanalysis.com
- Given the pandemic's strains on workers' physical, mental and financial health, which add to the long-standing problem of spiraling healthcare costs, it isn't surprising workers are looking to their employers for more support on these fronts, particularly in the form of employment benefit programs. But even when employers offer a wide array of benefits, workers often struggle to navigate their options.
- While employers understand the importance of ensuring their workers understand and derive value from benefits programs, helping employees optimize their choices is a complex undertaking, given almost limitless numbers of individual employee circumstances, preferences and combinations of benefits.
- A number of technology providers are well positioned to help address this challenge by providing decision-making and communication tools that make employees aware of their options and make optimal choices. We profile some of the exciting technology companies enabling these solutions.
- We expect the range of potential benefits to continue multiplying, providing ever-greater opportunities for employers to bring value to their employees and drive better business outcomes while driving significant growth for technology providers that help employees make better decisions and benefits providers and brokers better serve their constituents.
TABLE OF CONTENTS
Includes discussion of seven private companies
Optimizing benefits programs is crucial for both employers and employees
Technologies can help employers and workers optimize value from benefits programs
A substantial growth opportunity for technology providers
Future of work index beats the S&P 500, trails Nasdaq
M&A activity starts the year off strong on pace to reach last quarter's two-year high
Private placement activity on pace to surpass two-year high
Introduction
While increasing vaccine distribution appears to be a light at the end of the COVID-19 tunnel, the pandemic will have long-lasting effects on the attitudes many people have toward work, health and financial well-being. We believe this is particularly true of those near the beginning of their productive work life, much as the Great Depression resulted in lifelong changes in financial perspective among people who were young at the time. Prior to the pandemic, spiraling healthcare costs were already top-of-mind for both employers and workers, as average healthcare insurance premium per employee paid by employers had grown 22% over the five years ended in 2020 and employees' contribution had grown 13% (excluding deductibles and out-of-pocket costs), both in excess of inflation. Analysis of preliminary data from the Bureau of Economic Analysis by the nonprofit Altarum Institute suggests total healthcare spending in the United States declined approximately 2.0% (about $76 billion) in 2020 versus 2019, which would represent the first decline since at least 1960. However, we believe the decline was driven in large part by the unavailability of elective services and by people avoiding exposure to COVID-19 at healthcare facilities, so we expect healthcare costs to resume their climb as the pandemic fog lifts, perhaps augmented by pent-up demand for services deferred during 2020 and 2021.