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Some see health exchanges as viable for certain populations
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:
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 AmountsLarge 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?
Employee % of premium
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:
“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 TiersLarge employers were asked: In your plan with the most participation in 2013, which tiers do you have in place?
Employee and spouse
Employee and child
Employee, spouse and child
Premium contribution based on each dependent covered
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:
Consumer-Directed Health Plan TypesLarge employers were asked: What types of consumer-directed health plans are you offering in 2013 and 2014?
High-deductible health plan (HDHP) with health savings account (HSA)
HDHP with health reimbursement arrangement (HRA)
HDHP with HRA and flexible spending account (FSA)
Other plan type with HRA
Lower-deductible health plan that promotes consumerism
HDHP with FSA
HDHP without a health account
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 OfferingsLarge employers were asked: Do you currently provide or will you provide any of the following programs?
Health assessments/health-risk questionnaires
Telephonic or onsite health coaching
Onsite weight-management programs
“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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