We will start with a little more detail on how much of the premium in a typical employer health plan the worker pays. It is generally a lot, but it varies by firm size. Interestingly, smaller employers are more likely to pay the full cost of single coverage, but tend to have employees pay more of the family premium. Larger employers generally have employees pay part of the cost of single coverage but have them pay less of the family premium than do small companies. Thirteen percent of workers are in a plan where they pay $12,000 or more annually for family coverage. That is obviously a thousand dollars a month, a big cost for those families. People in health savings account plans generally have lower contribution requirements.
Employers are positively freaked out by what health care is costing them, but they know it is critical to employee satisfaction to provide those benefits. Employers spend an enormous effort trying to control costs, but generally have been unsuccessful. There are a myriad of vendors who offer general and specialized services to control health spending, but most employers don’t feel they are getting a lot of value. The most common tactic used by employers is actually to increase what the health plan costs employees, by raising premium contributions and increasing deductibles and copays. Other tactics including changing the outside insurer or plan administrator, increasing prior authorization and other utilization management efforts and using a different or narrower network of providers. Larger companies are more likely to be active in making these changes to control costs than are small firms.
Fifty percent of employees are enrolled in a PPO plan design; that allows going out of network with a lower benefit. 29% are in HSA designs, those allow employees to contribute to a savings account, often with an employer match, and the savings account can be used for deductibles, copays, etc. 12% are in an HMO, which tends to have a limited network that must be used. 71% of workers are in a self-funded plan, with 85% at large employers in those plans. Increasingly, large employers don’t even give the option of enrolling in an actual insured plan. There is an increasing use of what are called level-funded plans, which currently evade certain regulatory requirements, but are financially very akin to a fully insured plan.
