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How Disney’s Encanto Captivates Hearts and Even Benefit Trends

A few weeks ago, I was watching the hit Disney animated movie Encanto with my children. Like everyone else, I was captivated by the lovely story and especially the music and lyrics from Hamilton creator Lin-Manuel Miranda. The next day at work I was humming along to one of the songs stuck in my head while reading articles on 2022 benefit trends and a light bulb went off. I realized how many of the soundtrack song titles and themes went along with issues many human resources (HR) and employee benefit professionals are facing two years into the pandemic. As companies are starting off 2022 with the peaking omicron variant, inflation, difficult labor market, intertwined with many other business pressures and concerns, I realized just how many key employee benefits issues and trends are aligned with Encanto songs.

The Great Resignation (“What Else Can I Do?”)

It’s no secret that many businesses are struggling with hiring and retaining talent, especially in the service and health care industries. Beyond increase cash compensation, employee benefits are one area where companies are differentiating themselves to counter the Great Resignation. While health care benefits remain a top concern for job seekers and employees, more personalized benefit choices that meet employee’s unique needs are becoming more prevalent. These benefits include subsidized childcare, tools that promote financial wellness, paid family and medical leave, and telehealth. In answering the question, “What else can I do?” for employees, employers should complete and in-depth review of their current offerings and consider steps to create tailored solutions to attract and keep workers in the current competitive labor market.

New Strategies to Combat Health Care Cost Trends and Reduce Cost Shifting to Employees (“Surface Pressure”)

In 2021, employers and plan sponsors were reluctant to cost shift to employees due to so much uncertainty with COVID-19 and a tight labor market. In addition, there was some expectation that health care costs due to long COVID as well as delayed preventive and primary care would contribute to compound health care cost increases. All of these factors resulted in an expected 6.3% health care trend for 2021 (compared to 3.4% the year before), according to the Mercer 2021 National Survey of Employer-Sponsored Health Care Plans. 2022 trends are expected to moderate again; however, surface pressure of these cost increases is building, and employers are looking for escape valves in many areas. Many cost containment strategies have been employed successfully in the past and continue to be relevant. They include engaging employees in wellness and preventive programs to stave off potential chronic issues and keep costs low, managing members with chronic conditions such as diabetes and high blood pressure and closing their gaps in care, and medical and nurse case management for large claims and high-cost situations. Newer strategies are also emerging around eliminating health disparities and removing obstacles to care that are inherent in the current health care delivery infrastructure. These strategies require an extremely targeted approach using data analytics and personalized programs that work towards an aspiration of health equity. The relief in health care cost pressure will likely come from a combination of many efforts that include eliminating barriers in the social determinants of health—lack of or inadequate insurance, proximity to care, and ability to take time off of work to deal with health care issues.

Employee Wellbeing and the Role of Virtual Care (“All of You”)

According to research by Cigna, virtual health visits made up just over 1% of medical and behavioral health visits pre-pandemic. Today that share is around 25%. Telemedicine is perceived as convenient and flexible for employees and members, and it also can save on health care costs compared to an in-person visit. Mental and behavioral health care are especially suited for high quality and convenient delivery over virtual platforms. Over 60% of behavioral health patients have used virtual services, according to a 2021 study by Everworth. Employers are seeing the value in virtual care not only in lower health care costs, but also higher productivity, with 44% of human resources decision makers reporting that mental health services will become a long-term focus of their strategies. The pandemic brought about rapid change, investment, and opportunity for telemedicine. The future is moving in a digital direction when it comes to delivering care that meets the needs for all of you, the patient.

The Rising Cost and Use of Specialty Drugs (“Waiting on a Miracle”)

Even before the pandemic, health care industry experts and payors were very concerned about the rapid growth of specialty drug utilization and cost. The pipeline of specialty drugs has exploded in recent years, and correspondingly the cost, increasing by 50% per member per month between the 1st quarter of 2018 ($53) to the 2nd quarter of 2021 ($80), according to a study by health care data analytics company Springbuk. The Catch-22 of this situation is that these drugs can be literally miracles for patients who need them, yet they are often extremely expensive for plan sponsors. There is some hope on the horizon for certain specialty drugs that have biosimilars coming on the market in the next few years. One example is Humira, which is one of the top-prescribed specialty drugs, and has several biosimilar drugs expected to be released by 2023. Other cost containment strategies for specialty drugs include optimizing site-of-service for drugs typically delivered in a hospital or outpatient facility, pre-authorization and step therapy, and value-based programs that continuously monitor effectiveness and efficacy of the drug in the patient. Because of the highly unique and complex nature of the conditions that specialty drugs treat and also the complex factors that contribute to the development and delivery of these medications, engaging with specialized pharmacy and benefit consultants that can analyze company-specific data and work with pharmacy benefits managers (PBMs) and health plans is critical.

Compliance (“We Don’t Talk About Bruno”)

I had to leave the mega hit We Don’t Talk About Bruno for last and to align with an unglamorous, yet necessary, topic—compliance. In today’s world, HR and benefit professionals would be remiss to stick their heads in the sand when it comes to tackling regulations and compliance issues. Enforcement is expected to increase under the Biden administration, and there are several new and updated regulations that have come to the forefront for investigation into employer and plan sponsor practices and compliance efforts. The Consolidated Appropriations Act of 2021 contained a number of provisions focused on improving transparency and strengthening consumer protections with respect to health insurance coverage. These measures include the No Surprise Billing Act, Health Care Cost Transparency, and Mental Health Parity Nonquantitative Treatment Limitations (NQTL) Comparative Analysis requirements, among others. These regulations require a detailed analysis of plan provisions and qualitative medical management practices that plan sponsors must not ignore. While third party administrators and benefits partners play a key role in providing programs and administrative elements to fulfil the requirements of these regulations, the fiduciary duty remains with self-insured plan sponsors for compliance.


Encanto means charm or enchantment in Spanish, a very fitting title for the magical movie. However, keeping up with the latest compliance issues and managing a cost effective and valuable health benefits program for employees takes a lot more than magic and charm. But when you work with the right advisor, you can be singing a new tune that could just become a hit with your leadership and employees. As always, Cowden is here to help.