There’s a common trope that every company eventually becomes a tech company. But the reality is that because health benefits and employment are so closely tied, every company is actually a healthcare company!
This is because in the US, your healthcare and your employer are intimately tied, which is actually a rarity in developed countries. This is due to post-WWII policies that were enacted to freeze wage increases to prevent wartime inflation. But in order to keep talent without giving raises, they needed SOMETHING. So employers poured money into health benefits and insurance because they were tax exempt.
Here’s the crazy irony: now, wages are essentially stagnant while health premiums and contributions have skyrocketed.
Here are some other issues with employer-sponsored healthcare:
Many employees want to keep their employer and health separate! Would you want your employer to know that you’re using its mental health services or one of your children was costing the company a lot of money?
Insurance and other health services that you get through your employer are only concerned with you for as long as you’re working with your employer. If you switch jobs, you won’t be a customer of theirs anymore. So what is the incentive to take your long-term health outcomes into account?
It gives large employers a much more significant advantage by pouring money into lavish health benefits packages. Imagine being trapped at your company because they can cover you or your family members’ expensive illness. A lack of attractive health benefits makes it hard for small businesses to attract talent.
I could keep going but I’m getting the cutoff music.
Down For The Count
The rising employer health costs have attracted digital health startups like moths to a flame, with many seeing employers as the best group to sell to.
But the space has become incredibly saturated, and some shutdowns like Oration, Healthrageous, and RetraceHealth have proven that there are certain services employees don’t use or employers don’t think are worth paying for. I expect many more pivots, shutdowns, and consolidation for startups that target the employer market in the coming years.
European insurance giant AXA sees the employer market as a lucrative starting point to get into the US market with its acquisition of employee benefits and health insurance manager Maestro Health. We outlined AXA’s health strategy and investments.
