Largest Employers Continue Shift to High-Deductible Plans

Some see health exchanges as viable for certain populations

By Stephen Miller, CEBS Aug 28, 2013

The cost of providing employee health care benefits at the largest U.S. employers is projected to increase 7 percent in 2014, according to survey results released Aug. 28, 2013, by the National Business Group on Health (NBGH), a nonprofit association of more than 265 large U.S. companies.

In response, the biggest corporations are continuing their shift to high-deductible consumer-directed plans and making other benefit design changes.

The NBGH's Large Employers’ Health Plan Design Changes Survey,based on responses from 108 of the nation’s largest businesses, was conducted in June 2013—before the Obama administration’s decision to delay for one year the implementation of the employer mandate. Among its key findings:

  • The average 7 percent projected rise in health care benefits costs for 2014 is the same increase large employers projected for 2013.
  • Some big employers believe that health insurance exchanges could be a viable option for certain populations.
  • More companies plan to offer workers a consumer-directed health plan as their only health benefits option in 2014.

Another Cost Viewpoint

Cost projections can vary depending on sample demographics, methodology and other factors. Recently, PricewaterhouseCoopers (PwC) projected that the 2014 medical-cost-increase trend in the large-employer market would be 6.5 percent; it estimated a 7.5 percent jump for 2013. PwC expects the net cost increase for large organizations, after accounting for benefit changes such as higher deductibles, will be about 4.5 percent next year (see the SHRM Online article "Study: 6.5% Growth in Medical Costs for 2014").

Despite being able to keep cost increases stable for another year, employers continue to embrace changes designed to engage workers in health management and healthy lifestyles, the NBGH found.

“Rising health care costs remain a serious concern for U.S. employers,” NBGH President and CEO Helen Darling said at an Aug. 28 press conference in Washington, D.C. “Employers spent considerable time and energy this year designing health plans that comply with the various provisions of the Affordable Care Act that would have become effective next year. And while the decision to delay provisions related to the employer mandate has provided respite from some of these requirements, the pressure remains on employers to lower costs. Interestingly, many respondents indicated that a portion of their budgeted costs for 2014 was to implement changes mandated by the ACA. With the delay, it is unclear how employer costs will be affected.”

Employee Cost-Sharing Amounts

Large employers were asked: For your most prevalent plan, what are the employee contributions to premium and in-network deductibles in 2013, and what are your expectations for 2014?

2013

2014

Employee % of premium

Employee only

20%

20%

Family coverage

23%

24%

In-network deductible

Employee only

$500

$500

Family coverage

$1,000

$1,200

Source: National Business Group on Health

Exchanges a Viable Option for Some

While large employers will not be eligible to participate in state health exchanges until 2017 at the earliest, they expect that certain workers will find exchanges to be a viable option on an individual basis in 2014. For instance:

  • Roughly four in 10 employers believe that COBRA plan participants may find public health exchanges to be the most cost-effective option.
  • More than one-fourth think that some pre-65 retirees will opt to join exchanges.
  • Some part-time employees will do the same, 20 percent believe.

“Private exchanges are another option some employers are considering,” said Darling. “In the last year there has been an increase in the number of private exchanges that are being launched. And while some employers are considering private exchanges for active employees sometime in the future, very few—just 3 percent—are considering eliminating health care coverage entirely.”

Plan Tiers

Large employers were asked: In your plan with the most participation in 2013, which tiers do you have in place?

Employee only

99%

Family coverage

84%

Employee and spouse

74%

Employee and child

69%

Employee, spouse and child

14%

Premium contribution based on each dependent covered

9%

Other

1%

Source: National Business Group on Health

More Employers Embracing Total Replacement CDHPs

The survey revealed that more than one-third of respondents (36 percent) consider implementing a consumer-directed health plan (CDHP)—with either an employee-owned health savings account (HSA) or an employer-owned health reimbursement arrangement (HRA)—the most effective tactic to control rising costs. (To learn more about these tax-advantaged savings vehicles, see the SHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs.")

The survey found that:

  • Nearly three-quarters of employers (72 percent) now offer at least one CDHP. This number has remained relatively steady over the past couple of years.
  • The number of businesses that are offering employees only a CDHP continues to rise, with 22 percent planning to implement a total replacement CDHP next year, up from19 percent in 2013.

Consumer-Directed Health Plan Types

Large employers were asked: What types of consumer-directed health plans are you offering in 2013 and 2014?

2013

2014

High-deductible health plan (HDHP) with health savings account (HSA)

79%

79%

HDHP with health reimbursement arrangement (HRA)

29%

26%

HDHP with HRA and flexible spending account (FSA)

13%

18%

Other plan type with HRA

13%

8%

Lower-deductible health plan that promotes consumerism

5%

8%

HDHP with FSA

13%

4%

HDHP without a health account

4%

1%

Source: National Business Group on Health

Onsite Health and Wellness Programs

The survey asked organizations about a variety of initiatives they use to manage their employees’ health. More than four in 10 respondents (44 percent) have an onsite clinic in at least one of their locations, with 9 percent expecting to build a clinic next year.

Employers cover a variety of services/medications that treat obesity and severe obesity. Next year nearly two-thirds of respondents (66 percent) will cover surgical procedures that correct severe obesity.

Wellness Program Offerings

Large employers were asked: Do you currently provide or will you provide any of the following programs?

Tobacco-cessation

89%

Health assessments/health-risk questionnaires

88%

Biometric screenings

83%

Telephonic or onsite health coaching

77%

Onsite weight-management programs

55%

Source: National Business Group on Health

“Employers continue to implement numerous tactics to control costs, improve employee health and productivity, and ensure the delivery of high-quality health care to their employees and dependents,” concluded Darling. “Some employers are taking creative approaches in their efforts to win the war on rising health costs. These include managing specialty and nonspecialty pharmaceuticals, contracting directly with providers who have been shown to provide high-quality health care, as well as offering employees numerous programs designed to help them live a healthy life.

Stephen Miller, CEBS, is an online editor/manager for SHRM.​

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