Commitment to employer-sponsored health plans on the rise
Source: https://www.benefitspro.com
By Kathryn Mayer
What a difference a year can make. A new industry report finds that significantly more employers than last year say they will “definitely” continue to provide health care coverage when health exchanges come online next year.
According to preliminary survey results from the International Foundation of Employee Benefit Plans, 69 percent of employers said they will definitely continue to provide employer-sponsored health care in 2014, while another 25 percent said they are very likely to continue employer-sponsored health care.
That’s a 23 point increase from 2012, when 46 percent reported being certain that they would continue employer-sponsored health care.
Opponents of President Obama’s Patient Protection and Affordable Care Act have argued that employers are likely to drop health coverage as an unintended consequence of the law that will negatively affect employees who want to stick with the coverage they know and like.
Estimates have varied widely on just what reform will do to employer-based health coverage. A Deloitte report last summer estimated that one in 10 employers will drop coverage for their employees, while consulting firm McKinsey & Co. drew fire when it stated 30 percent of respondents will “definitely” or “probably” stop offering employer-sponsored health insurance after 2014.
The IFEBP survey found the vast majority of employers (90 percent) have moved beyond a “wait and see” mode, and more than half are developing tactics to deal with the implications of reform. Organizations maintaining a wait-and-see mode decreased from 31 percent in 2012 to less than 10 percent in 2013.
Since the foundation’s first survey regarding reform’s impact on employer-sponsored coverage in 2010, employers have most commonly said keeping compliant was their top focus. In 2013, for the first time, most employers said their top focus is developing tactics to deal with implications of the law.
Still, the survey found estimates of cost increases directly associated with the PPACA have increased from 2012 to 2013. Employers with 50 or fewer employees are reporting the largest anticipated cost increase. Conversely, larger employers are the least likely to see significant cost increases.
Reform is expected to have a bigger impact on smaller employers than larger ones. Small businesses are making more employment-based decisions with hiring, firing and reallocating hours than larger employers, and they are more likely to drop coverage due to PPACA.
Despite employers' commitment to employer-sponsored health coverage, Gallup reported earlier this year that 44.5 percent of Americans got employer-based coverage in 2012, the lowest percentage since President Obama took office.
Results are based on survey responses submitted by more than 950 employee benefit professionals and practitioners through March 26.
What is an exchange and how does it work?
Source: https://www.liazon.com
An exchange is an online store where employees can purchase benefits. Exchanges offer multiple options of health insurance plans, and may also offer other benefits, such as dental, vision, life, disability, and other options. Exchanges that are "private" are run by industry, while "public" exchanges are run by the government.
In most cases, the employer uses a defined contribution strategy to give each employee a set amount of money to purchase benefits. The employees and their families can then go shopping in the exchange with the money allocated by their employer and add their own if needed. Depending on the exchange, employees can receive guidance and education about the plans to help them make purchasing decisions.
CDHPs increasingly popular among employers
By Marli D. Riggs
Source: https://eba.benefitnews.com
Consumer-driven health plans have bypassed health maintenance organizations to become the second most common plan design offered by U.S. employers, according to an Aon Hewitt survey.
CDHP designs are becoming increasingly popular among employers because they provide the framework needed for educating and motivating employees to actively engage in managing their health and wellbeing, according to Maureen Fay, senior vice president and head of Aon Hewitt's CDHP working group.
In 2011, 58% of employers offered a CDHP and 38% offered HMO plans, according to the survey of nearly 2,000 U.S. employers representing more than 20 million U.S. employees and their dependents.
PPOs continue to be the most popular plans, with 79% of employers offering them in 2011.
“As employers struggle to address unsustainable increases in health care spend, they can no longer rely on traditional methods of tweaking plan designs like increasing copays and deductibles or increasing employee payroll contributions for medical coverage,” says Fay. “Employers are beginning to explore innovative solutions that focus on both the short-term need to manage health care costs and the longer-term requirement to change underlying behavior patterns, shifting the focus from ‘caring for the sick’ to ‘actively managing the health of their employees.’”
A growing number of employers are also considering using voluntary benefits, such as critical illness and accident insurance policies, to supplement CDHPs. More than a quarter (26%) can attribute an increase in CDHP enrollment to the availability of voluntary or supplemental medical benefits. While just 6% of employers use voluntary benefits today to complement the CDHP and encourage enrollment, 42% report they will consider this approach in the next few years.
Among employers that offer CDHPs, health savings accounts outpace health reimbursement arrangements, 34% to 18%, respectively. However, the survey shows a higher number of employees enrolling in HRAs (43%) compared to HSAs (28%). HRA plan designs are popular among large employers embarking on full replacement CDHP strategies, as they offer more design flexibility to the employer than HSA designs.
Employers are using a variety of tactics to encourage employees to enroll in CDHPs, including subsidizing premiums at a higher level than other plan options (36%), covering preventive medications before the deductible (34%) and contributing employer funds to the HSA (30%) and HRA (22%).
Employees are willing to try CDHPs and their associated accounts, and will continue to choose them because they often come with a lower premium, according to a separate survey of 3,000 employees and their dependents by Aon Hewitt, The Futures Company and the National Business Group on Health. However, employees find the plans challenging to understand and use.
“Employees want to choose the most cost-effective plan with the least hassle, but they often have very full lives and are not all that interested in digging into the details of CDHPs, HSAs and HRAs,” says Joann Hall Swenson, partner and health engagement best practice leader at Aon Hewitt. “Our research and experience tells us that simply giving employees lots of educational information about these plans and accounts is only helpful to the small minority of people who like all the details.”
To address this, she offers employers the following tips:
• Make sure the right people are in the right plan. Employers need to identify segments of their population most likely to value and take advantage of the unique features of the CDHP, and tailor the marketing to them. They also need to monitor employees’ day-to-day experience of using the plan to ensure it “re-sells” itself and engages consumers in the appropriate financial and health behaviors.
• Reinforce the plan’s actions and advantages. Employers should articulate what’s in it for employees; how they can benefit from the plan’s key features, and be very specific about the actions they need to take.
• Make it easy for employees and their families. This includes removing barriers to care at the point of need through initiatives like value-based plan designs or fully-funding employer contributions to HSA/HRA accounts at the beginning of the year.
To be effective, employers must also provide tools and support throughout the year so more employees and their families can learn how to:
• Participate in activities to help them assess their health opportunities and risks such as health risk assessments and biometric screenings.
• Navigate new tools to help them make smart choices in selecting appropriate treatments.
• Leverage behavioral and clinical resources like disease management nurses and health coaches to help set and make progress toward health improvement and maintenance goals.
• Follow preventive care guidelines to stay their healthiest.
• Manage chronic conditions by working closely with their physician and adhering to evidence-based treatment protocols.
Wellness programs could mitigate projected 2013 health care cost increases
By David Morgan
May 31, 2012
Source: https://eba.benefitnews.com
WASHINGTON | Thu., May 31, 2012 12:00am EDT (Reuters) — The cost of U.S. health care services is expected to rise 7.5% in 2013, more than three times the projected rates for U.S. inflation and economic growth, according to an industry research report from PricewaterhouseCoopers.
But premiums for large employer-sponsored health plans could increase by only 5.5% as a result of company wellness programs and a growing trend toward plans that impose higher insurance costs on workers, the firm concluded.
The projected growth rate of 7.5% for overall health care costs contrasts with expectations for growth of 2.4% in U.S. gross domestic product and a 2% rise in consumer prices during 2013, according to the latest Reuters economic survey.
Health care costs have long been known to outstrip economic growth and inflation rates, driving up government spending on programs such as Medicare and Medicaid at a time when federal policymakers and lawmakers are wrangling over how to trim the U.S. budget deficit of $1 trillion a year.
But PwC's Health Research Institute, which based its research on input from health plan actuaries, industry leaders, analyst reports and employer surveys, said data for the past three years suggest an extended slowdown in healthcare inflation from earlier decades when annual costs rose by double-digits.
"We're in the early beginnings of a shift toward consumerism in health care. And we think that you'll see more of that in the coming months and years," said Ceci Connolly, the health institute's managing director.
More than half of the 1,400 employers surveyed by the firm are considering increasing their employees' share of health benefit costs and expanding health and wellness programs in 2013, according to the report.
Connolly said health plans with higher deductibles and co-pays for workers tend to dissuade unnecessary purchases and offer lower premium costs for employers, while successful wellness programs can reduce the need for medical services.
The report said prospects for higher growth are also being held back by the consolidation of hospitals and physician practices, insurance industry pressure on hospital expenses, a growing variety of primary care options such as workplace and retail health clinics, price transparency and the increasing use of generic drugs.
Upward pressure on health care costs comes in part from a rebounding economy and the growth of new medical technologies, including robotic surgery and the nuclear medicine imaging technique known as positron emission tomography.
PwC's projection of 7.5% growth is nearly double a 3.9% rise in U.S. health care spending that the federal government says occurred in 2010, the last year for which official figures are available.