After plan design changes and vendor negotiations, 2019 medical and pharmacy plans premiums are expected to increase by 3.5%, the same percentage as 2018, according to an actuarial analysis by Aon plc.
For 2018, the increase in employees’ contribution to the cost of their health plans was held to their lowest level over the last five years. The combined increase in what employees contribute to the cost of the health plan through contributions from their paychecks and the costs at the point of service (or doctor’s office) is 1.6% in 2018. In 2019, these costs are expected to increase slightly over their 2018 levels.
Still, employers are increasingly looking to manage cost increases through means other than shifting cost onto employees.
Strategies employers are using include:
- Personalized provider navigation and transparency solutions, such as Aon’s Provider Optimization solution, to help patients find high-quality, cost-effective care locally or appropriate digital health and telehealth solutions based on the need;
- Programs aimed at impacting chronic conditions. Aon’s research shows half of employers are considering adopting condition-specific high performance networks over the next three-to-five years;
- Adopting Center of Excellence (COE) strategies for certain non-transplant procedures (29% of employers have one today, and another 51% are considering it in the near future);
- Offering integrated delivery models (patient-centered medical homes or accountable care organizations (ACOs)) to improve care delivery effectiveness (15% offer one today, and another 54% are currently piloting them);
- Impacting the overall efficiency of the care delivery system by challenging the way employers pay for services and exploring options for value-based arrangements. Aon’s research shows that 20% of employers offer value-based insurance design approaches, and another 59% are considering doing so in the future; and
- Managing vendor costs by entering into purchasing coalitions for prescription drugs or direct contracts with providers.
“Historically, employers have had limited tools to understand the variability in cost and quality in their markets,” says Todor Penev, senior vice president and innovation leader at Aon. “Employers can now identify opportunities to develop local provider strategies that improve quality and lower costs.”
Aon’s projections are based on data from its Health Value Initiative database, which captures health care cost and benefit data for 497 large U.S. employers representing 10.9 million participants, more than 1,260 plans and $62.5 billion in 2018 health care spending.
The pharmacy market is also shifting to address the cost and transparency of drug pricing practices, Aon adds. Traditionally, rebates were a relatively small portion of the total cost of branded products, but over the last five years, rebates have become a substantial portion of these costs and have been integral to lowering drug cost trends.
Recently, there has been a growing interest into how much of those rebates are truly passed on to plan participants at the point of sale and Aon expects further transparency into the entire pricing structure of market participants, including drug manufactures and pharmacy benefit managers (PBMs) .“The combination of high drug prices, high brand inflation, increased rebate value and a pipeline filled with expensive specialty medications is causing pressure to mount for a change in how plan sponsors pay for prescription drugs,” says John Malley, senior vice president and pharmacy leader at Aon.