Large Employers Revamping Health Care Cost Reduction Strategies

Employers expect the cost of offering health care services to increase for the fifth consecutive year, according to the Large Employers’ 2018 Health Care Strategy and Plan Design Survey.


With an expected 5% hike in health care benefit costs, large U.S employers are looking at new ways to trim expenses while offering employees a broader set of services, including telehealth assistance and on-site health centers. These are some of the findings drawn from the recent Large Employers’ 2018 Health Care Strategy and Plan Design Survey by the National Business Group on Health (NBGH).

According to the survey, the total cost of offering medical and pharmacy services will spike to about $13,482 per employee. It would mark the fifth consecutive year health care costs increased. The NBGH finds that employers will shoulder about 70% of that burden, while employees cover the remaining 30%, or about $4,400 per year.

While utilizing cost-sharing strategies will remain an integral part of cutting costs, the survey finds large employers are also turning to plan design changes and new services in order to make offering health care benefits more efficient.

For example, the survey found, nearly all employers (96%) plan on offering telehealth services next year in the states where these are allowed. More than half (56%) plan to provide telehealth for behavioral health services. That rate more than doubled from the percentage this year.

Several employers are also turning to accountable care organizations (ACOs) with 21% of companies planning to establish one next year. The NBGH predicts the number of employers offering ACOs could double by 2020 and states, “Employers are slightly more confident about the ability of ACOs to improve health care quality beyond what the system does today, compared to reducing costs.”

In addition, more employers are opening an on-site or near-site health center. More than half (54%) expect to offer such a center in 2018, and that rate could increase to nearly two-thirds by 2020. The group notes that the presence of such health centers has left a positive impact on business performance by reducing absenteeism.

Alternative payment systems are also getting a closer look, with 88% of employers expecting to take on a bundled payment strategy through centers of excellence (COEs). Employers expect to use COEs in 2018 for certain procedures such as transplants or orthopedic surgery. Bundled payments or other types of alternative payment arrangements will be used by 21% through 48% of COE contracts, depending on the medical procedure or condition.

About 40% of employers are taking advantage of value-based benefit design, giving employees reduced cost sharing or premium reductions when they take steps to manage chronic conditions. Employers are also looking to cut costs by working to offer employees a wider scope of transparency in today’s often-complex health care system.

“One of the most interesting findings from the survey is that employers are focused on enhancing the employee experience,” says Brian Marcotte, president and CEO of the NBGH. “For example, there is a big increase in the number of employers offering decision support, concierge services and tools to help employees navigate the health care system. The complexity of the system and proliferation of new entrants has made it difficult for employees to fully understand their benefit programs, treatment options and where to go for care.”

According to the survey, 66% of companies will offer medical decision support and second opinion services in 2018, an increase of 47% from this year. The number of companies offering high-touch concierge services is expected to climb from 28% this year to 36% in 2018. 

NEXT: CDHPs still on the rise 

Nearly all (90%) of large employers plan to offer at least one consumer-directed health plan (CDHP) in 2018. Of these, about 40% will offer a CDHP as the only plan option, compared with 35% this year.

The most common CDHP design is a high-deductible health plan (HDHP) paired with a health savings account (HSA). The combination is offered by 80% of employers with any type of CDHP. About a quarter of employers (28%) pair an HDHP with a health reimbursement arrangement.

“As employers look ahead, we expect them to increasingly focus on value purchasing opportunities within the delivery system and improving the experience for health care consumers. Finding solutions to the growing challenge of skyrocketing specialty pharmacy costs will also remain a top priority,” says Marcotte.