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AonHewitt Analysis of Employer Health Costs

By November 20, 2015Commentary

AonHewitt is one of the major US benefit consulting firms, with a significant health practice.  Its latest survey of 600 large US employers finds that on net basis after design changes and other factors, employers experienced a 3.2% increase in health care costs in 2015, the lowest rise since 1996, but the average health care cost per employee is now over $11,000.   Aon expects employers’ health costs to grow 4.1% in 2016.  (AON Release)   While overall spending growth is relatively low, employees are bearing most of the pain, with more to come according to the survey.  In the last ten years the average amount employees pay toward their health care has increased by 134%.  Employees contributed an average $2490 toward premium and paid another $2208 in out-of-pocket costs in 2015.  The percent of total health care costs covered by companies has decreased about 1% per year since 2012.  Employers continue to be very focused on cost control and many of their actions affect what workers incur as health spending.  Aon’s research finds that 38% of firms have increased employee’s deductibles or copays and another 46% say they may put such increases in place in the near future.  High-deductible plans continue to grow in popularity and 41% of companies that don’t currently offer them, say they will in the next 3-5 years.

Employers are also increasing cost-sharing for persons covered other than the employee.  18% have reduced their subsidy for covered dependents and 17% have a surcharge for dependents who have access to health care coverage elsewhere.  Employers are also continuing to explore value-based designs.  22% of companies use benefit cost-sharing or other features to steer participants to “high-quality” (read “low-cost”) hospitals or doctors for specific treatment needs and 28% use some other benefit design feature that they call value-based.  Reference-based pricing is currently only used by 6% of companies but another 53% say they will adopt this strategy within the 3 to 5 years.  In regard to drugs, the category with the fastest spending growth, employers are relying more on coinsurance to drive compliance with formulary tiers, such as greater use of generics or preferred brand-names, and are implementing more step-therapy programs.

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