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Majority of Employers Want to Improve Health Care Plan Efficiency, Reduce Costs: Survey

Most employers plan to find ways to improve the efficiency of their health care plans rather than shift employees and retirees to insurance exchanges, according to a recent Towers Watson & Co. survey.

March 12, 2013
Related Topics: Health Care Costs, Benefit Design and Communication, Health and Wellness, Policies and Procedures, Health Care Benefits, Latest News
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In preparation for looming changes brought on by the Patient Protection and Affordable Care Act, a majority of employers are developing plans to improve health care delivery and manage rising health care costs, according to a survey published March 8 by Towers Watson & Co.

The survey found employers expect the average health care cost for employees to reach $12,136 this year, an increase from the 2012 average of $11,457. This 5.9 percent jump in price is the lowest in 15 years, according to the survey.

Employees are paying 42 percent more for health care than they did five years ago compared with the 32 percent more employers pay. According to the report, the average employee cost share, which includes premiums and out-of-pocket costs, has increased from 34 percent in 2011 to 37 percent this year. What's more, the survey found that 80 percent of employers said they will increase employee premium costs in the coming years.

In the next five years, 92 percent of survey respondents said they expect to see at least a modest change in health care, and almost half said they expected a significant or transformative change to take place.

Some employers are exploring the option of insurance exchanges for both active and retired employees, according to the survey. Thirty percent of employers said they are already facilitating a switch to an exchange-based plan for retirees, and 18 percent said it is likely they will direct their active employees to a similar plan.

Almost two-thirds of employers said they offer financial rewards to encourage participation in health programs, and 59 percent are planning to extend those rewards to employees' spouses as well, according to the survey.

"Companies recognize the need to create value-based benefit designs and develop a supportive workforce culture to engage employees in their own well-being," said Ron Fontanetta, senior health care consultant for Towers Watson, in a news release. "In fact, our study identifies a group of best-performing companies with much lower cost increases over the last four years than the median respondents. These companies have achieved critical success in cost reduction and improvements in workforce health and productivity."

The companies identified in the survey as best performers had an average health care cost increase of 1.7 percent in 2012, the survey reports. Such employers have taken steps such as focusing on communication to ensure employees select the smartest health plan for them in an effort to further improve the efficiency of their health care programs, according to the survey.

Max Mihelich is Workforce's editorial intern. Comment below or email editors@workforce.com. Follow Mihelich on Twitter at @workforcemax.

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