The average total health benefit cost per employee grew 3% to reach $13,046 this year, according to the annual Mercer National Survey of Employer-Sponsored Health Plans 2019.
Diverse workforce needs are increasingly shaping health program design. When asked about their priorities for the next five years, 42% of large and midsize employers (500 or more employees) identified “addressing health care affordability for low-paid employees” as an important or very important strategy. In 2019, most large and midsize employers backed off on requiring employees to pay more out-of-pocket for health services as a way to hold down premium costs: The average individual deductible in a Preferred Provider Organization (PPO), the most common type of medical plan, rose just $10 in 2019, to $992.
However, Mercer notes that the average deductible rose by more than $250 among small employers (10 to 499 employees), which typically have less ability to absorb high cost increases and fewer resources to devote to plan management.
Some larger employers that had offered a high-deductible health plan (HDHP) with a health savings account (HSA) as the only medical plan added a traditional PPO or Health Maintenance Organization (HMO) as an option. This trend was especially notable among employers with 20,000 or more employees. Those offering only a high-deductible account-based plan fell from 22% to 16%.
“This doesn’t mean HSA plans are going away, but to meet the various needs and budgets of today’s five-generation workforce, employers are increasingly offering an array of health benefit plans,” says Tracy Watts, Mercer’s national leader for U.S. Health Policy.
Cost-cutting solutions with no employee cost-share
As employers look for cost-management strategies that do not shift cost to employees, the survey found many are turning to innovative tech-enabled programs that help employees manage chronic conditions or other health needs.
In 2019, 58% of all large and midsize employers, and 78% of those with 20,000 or more employees, offer one or more of such targeted health solutions.
“Typically the goals of these programs are empowerment, convenience and lower costs,” says Watts. “For example, a physical therapy app that reminds patients when to do prescribed exercises, provides instructions, and even counts reps could mean fewer trips to a clinic, less out-of-pocket cost for the employee, and a better outcome.”
The survey also revealed another surge in telemedicine, with nearly nine out of 10 employers now offering a program to employees. Telemedicine expands access to care and is designed to reduce out-of-pocket spending. Telemedicine visits are typically less than half the cost of an office visit. In addition, teletherapy is now offered by 42% of employers with 5,000 or more employees.
But, utilization of telemedicine by employees is growing only slowly. Last year, among employers offering telemedicine, on average 9% of eligible employees used telemedicine, up from 8% the prior year, and about one in seven employers reported utilization of 20% or higher.
To improve utilization of health benefit offerings, 41% of large and midsize employers say all or most of their benefit offerings are accessible to employees on a single, fully integrated digital platform (most often through a smartphone app), up from 34% in 2018.
Whether the private- or public-sector is paying, one common finding is that health care costs are concentrated among a relatively small percentage of high need individuals, those who cost $50,000 or more in one year, the American Health Policy Institute notes.
These “high-cost claimants,” as they are called, are at the top of a long list of the most expensive sources of health care costs, surpassing medical inflation, pharmaceuticals, and any specific disease or condition. The Institute says in its report, “High Cost Claimants: Private vs. Public Sector Approaches,” that according to the National Business Group on Health, high-cost claimants are the No. 1 cost driver for 43% of large employers.
According to Mercer’s survey, employers are using innovative patient-centered programs to address high-cost claims. Managing these high-cost claims is the top priority for employers over the next five years.
The largest employers are taking the lead in offering enhanced health advocacy and intensive case management services, as well as programs that make it easy for members to seek an expert medical opinion on a diagnosis or their treatment plan. “Health advocates help patients and their families navigate a complex health care system to get to the right provider at the right time. When care is better coordinated, we often see less wasteful healthcare spending,” says Watts.
High-cost specialty drugs, such as those used in cancer treatment, are often a factor in high-cost claims. While spending on all prescription drugs rose 5.5% in 2019 among large and midsize employers, spending on specialty drugs rose 10.5%, according to Mercer. More than half of all large and midsize employers (52%) and more than three-fourths of those with 20,000 or more employees (78%) now steer employees to a specialty pharmacy, which typically provides enhanced care management. For example, some drug therapies can be administered at home at less cost and greater convenience for the patient and family.
The Mercer National Survey of Employer-Sponsored Health Plans is conducted using a national probability sample of public and private employers with at least 10 employees; 2,558 employers completed the survey in 2019. The survey was conducted during the summer, and results represent about 700,000 employers and about 124 million full- and part-time employees.The survey report is available here.
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