Employers Considering New Tactics to Tame Health Care Costs
June 11, 2014 (PLANSPONSOR.com) - While employee cost shifting remains the most prevalent strategy for employers to reduce health care costs, there is growing interest in adopting new tactics.
to Aon Hewitt’s soon-to-be-published Health Care Survey of more than 1,230
employers covering more than 10 million employees, 52% said their current health
strategy is focused on traditional trend mitigation approaches, such as
employee cost shifting. However, just 21% said this would be their preferred
approach in three to five years.
employers are considering new tactics that will require more action from
employees. In the next three to five years, more than 60% of employers plan to
“gate” employees to richer designs, where employees are required to complete a
“task” to access richer design options. About one in five employers gate their
strategies are becoming an increasingly attractive incentive technique among
employers as they look to improve the health of their employee populations,” explains
Jim Winkler, chief innovation officer of Health & Benefits at Aon Hewitt.
“For example, employers may offer a basic high-deductible plan to their entire
work force, but make a richer PPO [preferred provider organization] option
available to those employees who complete a health risk questionnaire or
The survey also found
68% of employers plan to adopt reference-based pricing—where employers set a
pricing cap on benefits for certain medical services for which wide cost
variation exists with no discernible differentiation in quality. Just 10% of
employers have adopted reference-based pricing as a tactic today.
recent analysis by the Employee Benefit
Research Institute (EBRI) examining actual health claims data for more than three
million individuals from 2010, found if reference pricing was adopted for all
workers with employment-based health benefits for the six health care services
it analyzed, spending on employment-based health benefits would fall about 1.6%
(see “EBRI Presents New DC Approach to Health Benefits”).
addition, the survey found, in the next three to five years:
of employers are or will be reducing subsidies for dependents;
of employers anticipate using unitized pricing—where employees pay per person
and not individual versus family—up from 5% today;
of employers are considering offering high-deductible health plans as a full
replacement plan, up from 15% today;
of employers plan to offer employees tools to guide decisions in plan selection
and utilization, up from 19% today; and
plan to offer cost transparency tools, up from 49% today.
long-term promises of innovative strategies, employers are still gravitating
towards existing cost control tactics because they can see immediate benefits,”
says Winkler. “However, these traditional cost-sharing approaches will not be
as effective in the future, and employers will need to adopt multiple
strategies to improve the foundation of how benefits are delivered, including
funding, design, clinical and provider system changes.”Rebecca Mooreeditors@plansponsor.com
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