Mercer’s Take on Employer-Sponsored Plans

By November 4, 2016Commentary

Mercer is one of the prominent benefit consulting firms, primarily working with larger employers.  As do all these firms, it conducts an annual survey relating to company health benefit offerings.  The 2016 survey covers 2544 firms.  (Mercer Survey)   Average total benefit cost per employee was $11,920 in 2016, an increase of just 2.4% over 2015.  That is one of the lowest annual rises in decades, but it is largely driven by benefit design changes that shift costs to employees.  29% of employees are in high-deductible plans, up from 25% in 2015.  And for very large employers, those with 20,000 or more employees, the high-deductible plan offer rate is 80% and 40% of employees at these companies are now enrolled in such plans.  As other surveys have shown, average costs are lower for small firms, $11,271 in this survey, than for large (over 500 employees) ones, $12,288, but this also reflects less rich benefit designs at small companies.  A high deductible plan with an HSA costs about 22% than a traditional PPO plan, even including employer HSA contributions.

For employees at large employers, premium contributions for single coverage in high deductible plans is $84 a month on average, compared to $132 for traditional PPO plans.  For family coverage the corresponding figures are $321 versus $467.   In either plan type that is a lot of money, but while the premium contribution is lower for a high deductible plan, the service cost-sharing is much higher.  59% of responding companies said they cover telemedicine services, a rapid increase from 30% in 2015, and 82% have retail clinics in their plan networks.  Adding these service settings can create substantial savings; a telemedicine visit averages $40 and a retail clinic one $60, while a primary care office visit is $125.  Drug costs continue to be a thorn in the side, with large employers saying they rose 7.4% in 2016 and they expect a slightly larger increase for 2017.  Overall employers anticipate a 6.3% cost increase in 2017, but with benefit changes they believe this can be held to 4.1%.  Many large employers continue to be concerned about the excise tax on high-value plans, but if they keep reducing benefits that will be less of a concern, except to employees.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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