Health care costs continue to rise at an unsustainable pace. For employers offering health plans, this upward pressure threatens not only budgets but also the ability to provide high-quality, competitive benefits. Yet some of the most successful plan sponsors are not only managing costs but actively bending the health trend. How? Through sophisticated use of data and analytics.

This blog explores how leading employers are using data to gain control over health plan spending, anticipate future trends, and implement smarter benefit strategies. It’s also the focus of our upcoming webinar, Moving from the Rearview Mirror to Full-Scale Color Radar: Using Data and Analytics to Lower Costs and Predict the Future of Health Care. Join us to dive deeper into the tools, insights, and real-world strategies plan sponsors are using to create healthier outcomes and more predictable costs.

Understanding the Health Trend

The “health trend” refers to the year-over-year increase in the cost of providing health insurance benefits. Influenced by factors such as inflation, new technology, an aging workforce, chronic disease, and utilization patterns, the trend is typically between 6% and 10% annually. Without intervention, this compounds quickly and becomes unsustainable.

Traditional methods of controlling costs, such as increasing employee cost-sharing or narrowing networks, may deliver short-term savings but often result in lower satisfaction, reduced access to care, and ultimately higher downstream costs. That’s why more sophisticated plan sponsors are turning to data.

The Shift to Data-Driven Decision Making

Rather than relying on historical cost containment strategies alone, forward-thinking employers use data to guide benefits design, vendor selection, employee engagement, and clinical initiatives. These organizations view their health plan not as a fixed expense but as a dynamic system that can be measured, evaluated, and improved.

This shift requires more than just basic reporting. It involves the integration of data from multiple sources and advanced analytics to identify cost drivers, predict future needs, and optimize plan design.

Key sources of data include:

• Medical and pharmacy claims

• Health risk assessments

• Biometric screenings

• Employee engagement and participation metrics

• Population health analytics

• Social determinants of health (SDOH) data

• Utilization and trend analysis from benefits platforms

When combined and analyzed correctly, this information provides a comprehensive view of both the financial and clinical aspects of a health plan.

Tools That Drive Impact

Let’s look at some of the key tools and methodologies top-performing plan sponsors are using:

1. Advanced Claims Analytics

Sophisticated claims analytics platforms can dissect healthcare spending at a granular level. These systems identify high-cost claimants, reveal patterns in chronic disease prevalence, and uncover inappropriate utilization. For example, analytics may flag patients receiving care in emergency rooms for non-emergent issues that could be redirected to primary care or telemedicine.

By understanding the true drivers of cost, employers can implement targeted strategies like disease management programs, site-of-care redirection, or focused communications around benefit options.

2. Predictive Modeling

Using machine learning and artificial intelligence, predictive modeling can forecast future health plan expenses based on current utilization patterns and risk factors. These tools can predict which employees are at risk for costly conditions like diabetes or cardiovascular disease and prompt early interventions.

Employers who implement predictive analytics often partner with population health vendors or their third-party administrators (TPAs) to build risk stratification models and proactive outreach strategies.

3. Integrated Data Warehousing

Best-in-class plan sponsors use integrated data warehouses that combine information across vendors and platforms. These centralized systems allow HR and finance teams to view health data alongside other benefit metrics such as absenteeism, disability claims, and employee demographics.

This integration helps reveal the bigger picture. For example, an increase in disability claims may correlate with gaps in mental health support. A spike in ER visits could be tied to poor access to primary care. These connections are harder to detect without consolidated data systems.

Strategic Actions Based on Analytics

Data is powerful, but its value depends on the decisions it informs. Successful employers turn insights into action. Here are several strategic levers that benefit from a data-first approach:

Plan Design Optimization

By analyzing how employees use their health plan, employers can make smarter decisions about deductibles, co-pays, and network options. For example, if claims show that employees are over-utilizing expensive imaging centers, the plan may incentivize use of lower-cost facilities or implement pre-authorization requirements.

Targeted Clinical Programs

Population health analytics often reveal subsets of the workforce that drive disproportionate costs. Chronic conditions such as diabetes, musculoskeletal disorders, and mental health issues are common culprits. Using these insights, employers can implement targeted programs such as care navigation, behavioral health coaching, or musculoskeletal therapy partnerships.

Pharmacy Management

Pharmacy claims can be a major cost driver. Through analytics, employers can spot patterns in high-cost specialty drug usage or uncover generic alternatives that employees may not be aware of. This can lead to formulary optimization, prior authorization enhancements, or migration to alternative funding models.

Smarter Vendor Management

Employers use performance data to evaluate vendor effectiveness. For example, is the telehealth vendor reducing unnecessary ER visits? Are the disease management programs actually improving clinical outcomes? Vendor accountability is essential, and data provides the evidence needed to make adjustments or renegotiate contracts.

Enhancing Employee Engagement

Data also helps improve communication. By understanding which benefits employees use and which they don’t, HR teams can tailor education efforts. Segmenting employee populations allows for personalized communication, driving higher engagement and satisfaction.

Case in Point: Real-World Results

Several employers who adopted these data-driven practices have achieved measurable results. Consider the example of a mid-sized manufacturing company that partnered with a data analytics firm to review its claims data. The analysis revealed high utilization of ER services and underutilization of preventive care.

By implementing an employee education campaign, expanding access to virtual care, and reducing co-pays for primary care visits, the company saw a 12% reduction in ER claims and a 9% increase in preventive screenings within a year.

Another employer, a large professional services firm, used predictive analytics to identify employees at risk for chronic conditions. After introducing a voluntary health coaching program and partnering with a digital wellness vendor, they reported lower trend increases year-over-year and higher employee satisfaction scores related to their health benefits.

Preparing for the Future

Healthcare continues to shift in terms of delivery, cost structures, and access. Employers who invest in analytics today will be better positioned to adapt to changes, negotiate with vendors, and respond to workforce needs.

Areas of focus going forward include:

• Greater use of real-time data dashboards

• More emphasis on social determinants of health

• Increased scrutiny of mental health services and outcomes

• Broader application of AI to detect gaps in care

• Integration with financial wellness data to address total employee well-being

Those who act on insight rather than assumptions will have the upper hand in managing costs and creating value in their benefits programs.

Why It Matters

Data is essential infrastructure for strategic benefits planning. Employers who adopt these tools and methodologies are not just cutting costs. They are creating healthier workforces, improving access to care, and enhancing the employee experience.

Take the Next Step with Tooher-Ferraris Insurance Group

At Tooher-Ferraris Insurance Group, we help employers make sense of their health plan data and turn insights into action. Our Benefits team uses best-in-class tools and proven methodologies to help you control costs, reduce risk, and design benefits that work better for your business and your people.

Want to see these strategies in action?
Watch our webinar: Moving from the Rearview Mirror to Full-Scale Color Radar: Using Data and Analytics to Lower Costs and Predict the Future of Health Care
You’ll gain practical takeaways and learn how to shift from reactive reporting to proactive strategy.

Ready to put your data to work? Contact the Tooher-Ferraris Benefits Team today.