Get access to the exclusive HR Resources you need to succeed in 2018!
SHRM board member David Windley discusses how unconscious bias can derail workplace diversity efforts.
Is your employee handbook keeping up with the changing world of work? With SHRM's Employee Handbook Builder get peace of mind that your handbook is up-to-date.
Build competencies, establish credibility and advance your career—while earning PDCs—at SHRM Seminars in 12 cities across the U.S. this spring.
#SHRM18 will expand your perspective – on your organization, on your career, and on the way you approach HR. Join us in Chicago June 17-20, 2018
Rate of insurers' cost increases is holding steady for U.S. employers
Members may download one copy of our sample forms and templates for your personal use within your organization. Please note that all such forms and policies should be reviewed by your legal counsel for compliance with applicable law, and should be modified to suit your organization’s culture, industry, and practices. Neither members nor non-members may reproduce such samples in any other way (e.g., to republish in a book or use for a commercial purpose) without SHRM’s permission. To request permission for specific items, click on the “reuse permissions” button on the page where you find the item.
The pace of the rising cost that insurers charge for employee health benefits in the U.S., having slowed a bit last year, looks to be leveling off at about 7.5 percent for 2017.
That figure does not take into account benefit plan design changes that are helping keep down the cost increases that employers will actually pay, such as shifting to higher-deductible, lower-premium health plans, using plans that contract with smaller provider networks and requiring preapproval for scheduled inpatient services. But it does suggest why employers are taking those steps to control their health care spending.
"While progress is being made to stem costs, the vast majority of respondents continue to grapple with how to rein them in," said Cecil Hemingway, co-head of Willis Towers Watson's health and benefits practice. The consultancy issued its
2017 Global Medical Trends Survey Report on May 4. The survey was conducted in October and November 2016 and reflects responses from 213 medical insurers worldwide.
North American Cost Trends
The survey looked at insurers' health benefit cost increases for the U.S. and Canada from 2015 through expectations for 2017.
Annual U.S./North American Health Benefit Cost Increase
Source: Willis Towers Watson.
In the U.S., "employers expect their plan trend to increase 5 percent for both 2016 and 2017 after plan design changes, higher than the 4 percent rise in 2015 and much higher than the general inflation trend (about 1.5 percent to 2.0 percent)," the research found.
As in recent years, "employers continue to make changes to their plan designs to keep employee cost increases to a minimum," the report notes. "But in this prolonged period of relatively stagnant wage growth, they are increasingly concerned about affordability. By 2018, more than half will make changes specifically designed to lower premium contributions for low-wage workers and out-of-pocket costs at the point of service. Likewise,
most offer account-based health plans with tax-advantaged health savings accounts, and many seed these accounts to help cover increased out-of-pocket costs."
At the same time, "a majority of employers focus their most aggressive cost cutting on minimizing the most expensive and commonly overused procedures," the report states. U.S. employers also are adopting cost-effective options to manage pharmacy spending—especially for high-cost specialty drugs—and redefining coverage for spouses who can obtain coverage from their own employers. In addition, more employers are offering telemedicine services.
The analysis tied this year's expected increase in Canadian health benefit costs, conspicuously outpacing escalating costs in the U.S., to factors such as rising behavioral health claims and greater use of high-cost drugs coming to market.
Global Cost Trends
The survey also looked at insurers' health benefit cost increases by global regions.
Annual Global Health Benefit Cost Increase
Source: Willis Towers Watson.
When insurers were asked what the most significant cost-driving factors are, they most often identified:
[SHRM members-only toolkit:
Managing Health Care Costs]
Wellness Programs Prevalent
In the U.S., three-quarters of insurers offer wellness/well-being benefits programs as part of their standard medical insurance programs, while just about half of insurers in Europe do, the survey found.
The most popular offerings include personal health risk assessments, second medical opinions, and health education programs that address lifestyle choices such as smoking, poor eating habits and lack of regular exercise.
With concerns about employee stress continuing to rise, 61 percent of insurers globally now include treatment for mental health and stress in their programs.
Insurers worldwide report that cancer, cardiovascular disease and respiratory illness are the three most expensive diseases in terms of medical claims. Respondents don't expect the situation to change in the next five years.
Related SHRM Articles:
IRS Sets 2018 HSA Contribution Limits,
SHRM Online Benefits, May 2017
Health Benefits Take Bigger Bite Out of Paychecks, SHRM Online Benefits, September 2016
Employers Project Health Premium Hike of 6% in 2017, SHRM Online Benefits, August 2016
Was this article useful? SHRM offers thousands of tools, templates and other exclusive member benefits, including compliance updates, sample policies, HR expert advice, education discounts, a growing online member community and much more.
Join/Renew Now and let SHRM help you work smarter.
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Please sign in as a SHRM member before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
Join SHRM's exclusive peer-to-peer social network
SHRM’s HR Vendor Directory contains over 3,200 companies