It will come as no surprise that cost continues to be the driving issue for employer-sponsored health insurance programs. Even though premiums only rose a seemingly modest 5 percent in 2016, that rate outstrips inflation and wage increases and is piled onto the previous years of constant increases, which continue to threaten the affordability of entire health care systems.
“When costs go up you only have a handful of options: get workers to pay more, change your network or reduce the scope of benefits,” said Matthew Rae, senior health policy analyst at the Henry J. Kaiser Family Foundation in Washington, D.C.
While the percent of premiums paid by employees has remained roughly the same for the past decade, at about 30 percent, their costs are going up in other ways, he said. The biggest example is the cost of deductibles, which has gone up seven times faster than the cost of premiums. “It means employees are paying a lot more money to receive the same level of care.”
In 2017, 84 percent of larger employers will offer at least one consumer-directed health care plan, or CDHP, which will usually have high deductibles, and more than a third will offer this as their only insurance option, according to a survey from the National Business Group on Health in Washington, D.C. Its one way employees are shouldering the brunt of the excessive cost of care.
Still, companies aren’t foisting all the added risk and cost onto employees. They are increasingly looking for innovative ways to mitigate increases for themselves and their employees, while ensuring they still have access to the necessary health care. These strategies include incentivizing employees for using high-performing preferred networks, taking advantage of telemedicine services, and providing them greater access to centers of excellence for complicated and specialized care, said Steve Wojcik, vice president of public policy for NBGH.
Wojcik has even seen companies provide travel and living expenses for employees to visit centers of excellence because they provide better value in the long run. “There is growing interest in encouraging enrollees to choose providers that are deemed high performing on efficiency and quality measures as a cost management strategy,” he said.
Another area of concern for employers is the high cost of specialty pharmaceuticals, which are used to treat chronic, serious, or life-threatening conditions and can cost thousands a month.
“It is the first time we have seen specialty pharma top the list of cost drivers for employers,” Wojcik said. In response, many are taking advantage of specialty tiers within the pharmacy plan design, and requiring certain drugs only be accessed through specific pharmacies. “Nearly all employers have implemented some pharmacy management techniques into their pharmacy benefits to help manage these costs,” he said. Employers are also beginning to consider defined contribution programs that provide employees with cash to spend as they want, as a way to curb costs. “We haven’t seen a big move in this direction yet, but employers are thinking about it.”
On the vendor side, recent attempted acquisitions between Aetna and Humana and Anthem and Cigna — which would drop the number of major health insurance providers from five to three — could have further implications on costs and plan options. However the mergers are still uncertain. In October, the Justice Department sued to block the two deals arguing they would reduce competition and drive health care costs higher; rulings are expected early this year. “There will be a lot of uncertainty in the marketplace as these mergers play out,” Rae said.
Regardless, none of the current cost challenges are going away anytime soon. For larger companies at least, a quality health insurance program that includes dental and vision is a minimal requirement if they want to attract and retain good talent.
“The key now is to engage employees in the health insurance program, figure out what they want, and provide them with the tools and guidance to navigate their health care options,” Wojcik said. He encourages companies to take advantage of search capabilities, as well as coaching services provided by vendors to help employees navigate their costs and options, he said. “These are complex decisions and there is no substitute for human support.”