Mercer Survey Regarding Employer-Sponsored Health Benefits

Another survey regarding company health plans has arrived, along with commentary from a leading health benefits consultant.   (Mercer Survey)   Four primary challenges for employers are listed; including health plan consolidation and vertical integration among health care entities, which may reduce choice and raise prices; uncertainty around new entrants in the health plan and health provider segments; ACA uncertainty, particularly around the impact of the individual mandate penalty repeal and the fate of the employer excise tax; and low unemployment making hiring difficult and creating a situation in which two-thirds of employees say health benefits are as important as pay in deciding where to work, while despite the better job market, employees feel financially stressed, with 30% saying they are not sure they can afford their health care.

Cost increases without design changes are running around 6% per employee per year, but design changes have reduced that to a more manageable 3%.  Those changes, however are largely to increase premium contributions and deductibles and other cost-sharing, which adds to employee stress.  Companies experience wide variation in cost increases.  For employers of 500 to 20,000 employees; 31% had no increase or a decrease in health costs per employee in 2017, 28% had one 5% or less, 22% saw a 6% to 10% increase and 19% had a 10% plus rise.  While high deductible plans and more cost-sharing have helped employers control costs, growth of these may be slowing.  Enrollment in these designs only went from 29% in 2016 to 30% in 2017.  And employers rarely force the design on workers; only 10% had it as the sole health plan option and 36% didn’t offer one at all.  That is a little surprising, because these plans, when coupled with an HSA, average per employee costs that are 20% lower, considering both employer and employee costs.  Some of that may be selection factors.

To help with costs, 72% of employers are now offering telemedicine benefits and 82% some kind of price and quality transparency tool.  51% are offering employees optional cancer or critical care insurance.  Other strategies identified by employers as very important include 48% focussing on high-cost individuals, 43% on specialty pharmacy costs, 34% on creating a culture of health and wellness, 18% on encouraging employee use of decision support tools and only 14% on use of ACOs or other high-performance networks.  Primary tactics deployed against these concerns include mandating use of specialty pharmacy vendors, encouraging use of outside expert medical opinions and guidance, use of centers of excellence and value-based contracting with providers.  Surprisingly, there a few firms using incentives to drive employee adoption.  In this environment, Mercer’s advice to employers boils down to pay for value, drive to quality, personalize design and embrace disruption.  Huh?