Employer Health Plan Cost Growth for 2017

The National Business Group on Health represents very large employers.  And WillisTowersWatson does a lot of consulting work for large employers.  Both released results from surveys regarding health plan costs and trends for 2017.    (NBGH Release)   (Willis TW Release)   According to the NBGH survey of 133 employers, cost rises are expected to be around 6% in 2017, similar to the last two years.  Benefit design actions may take that down to 5%.  Employees will bear a proportionate share of that increase.  Specialty drug costs are the primary cause of the increase, according to these employers, followed by high-cost patients and certain diseases.  Narrow networks and centers of excellence are a renewed focus of efforts to control spending.  90% of employers will pay for telehealth services next year.  84% of employers will offer a high-deductible plan and at 35%, it will be the only option.  80% will offer coaching to help manage certain diseases and 72% for lifestyle management issues, like diet and exercise.  65% will make decision support tools available to employees.

The Willis survey of 600 companies found expectations of a 5% cost increase in 2017, the same as 2016 but up from 4% in 2014.  This will be nearly $13,000 annually per employee.  As with NBGH, Willis’ respondents indicated that they will not disproportionately shift these increases to employees.  88% of these employers said controlling specialty drug costs was their top priority, utilizing more prior authorization, changing copays to encourage use of cheaper sites of care and focusing on medical benefit specialty drug spending.  A third of employers have spousal surcharges and more expect to do so in the next two years.  High-deductible plans continue to be a focus for this group as well, with half of employers saying it will be their sole option by 2018.  This survey similarly reports greater availability of self-service and decision support tools and use of centers of excellence for surgeries, cardiac and fertility needs.  While 6% cost growth sounds moderate compared to some earlier periods, in comparison to company revenue and profit growth, it is an ongoing problem, and if that bumps up substantially in future years, we might expect more drastic responses from employers.