Large Employers Have Strategy to Stem Health Care Costs

Most employers say they will be able to stem increases even more as a result of changes they are making to their benefit plans, according to the survey from the NBGH, a nonprofit association of large employers. In addition, the number of employers offering employees a consumer-directed health plan (CDHP) as the only health benefit option is expected to increase by nearly 50% in 2015. Almost one-third (32%) of employers reached for the survey plan to do this in 2015, compared with 22% this year.

The projected 6.5% cost increase for 2015 is slightly lower than the 7% increase employers would have experienced had they made no changes to their plan design, according to NBGH. Employers that are making changes expect to keep increases to 5% in 2015, usually by implementing cost-sharing provisions, expanding access to CDHPs, and broadening the use of wellness programs and centers of excellence.

“Despite the many distractions that the [Patient Protection and] Affordable Care Act (ACA) has created, large employers haven’t lost sight of the fact that rising health care costs remain a significant issue that needs to be constantly addressed,” says Brian Marcotte, president and CEO of the National Business Group on Health, based in Washington, District of Columbia.

Marcotte adds, “Our survey shows that many employers are, in fact, taking necessary steps to rein in costs. This includes partnering with workers to engage in health care decisions and educating them to be better health care consumers, as well as sharing more costs with workers and narrowing their benefit options.”

The survey finds that employers are making numerous changes to their benefit plans in an effort to control costs, as well as to comply with the ACA and stay below the excise tax limit set to be implemented in 2018.

Nearly three in four respondents (73%) are adding or expanding tools to encourage employees to be better health care consumers. More than half (57%) are implementing or expanding CDHPs, while 53% will either add or expand wellness program incentives.

Private Exchanges

The survey finds that while no employers intend to eliminate health benefits coverage for their active employees next year, interest in private exchanges is growing. By next year, 3% of large employers will provide their active employees with health insurance through a private exchange, while 35% say they are considering doing so for 2016 or beyond.

In the meantime, 14% of respondents are partnering with a private exchange for their retirees, an increase from 10% last year. Another 7% are planning to move retirees to private exchanges next year.

Employers have varying degrees of confidence about private exchanges performing better than their own benefit plan. Survey results show that 77% of employers are confident in the exchanges’ ability to provide more choice of plans, while 51% said exchanges will do a better job complying with regulations. Only 17% of respondents are confident that exchanges do a better job of engaging employees in better health care decision-making. Only one in 10 believe exchanges will control costs better than their own plans.

“Employers, including many of our members, are clamoring for information and help in understanding private exchanges, and whether they make sense for their organizations,” says Marcotte. “The proliferation of private exchanges is presenting employers with an option, but one that employers need to ask questions about and study carefully. Employers will want to determine whether a private exchange can manage costs and care more efficiently than what they are currently doing.”

Other Findings

The survey also reveals the following:

• Narrow Networks – Despite recent attention, only one-fourth of employers (26%) include a narrow network in any of their plans. Half of those (13%) offer a plan that incents employees to use a narrow network within the plan.
• Specialty Pharmacy Benefits – Some employers are adopting specialty medication and prescription programs to help control costs. One third (33%) use a freestanding specialty pharmacy, while 29% only approve coverage for a 30-day initial supply of medicines.
• Weight Management – Nearly three-fourths of respondents (73%) will cover surgical interventions for the treatment of severe obesity, while 41% will cover FDA-approved medication. Both are increases from the percent of employers that cover these this year.

The NBGH survey is based on responses from 136 of the nation’s largest corporations and was conducted in June.

The National Business Group on Health is a nonprofit organization that represents large employers’ perspective on national health policy issues and providing practical solutions to its members’ health care problems. For more information, visit www.businessgrouphealth.org.