With continued concerns about increasing health insurance premium rates, more large employers are cutting back on what they will pay for and directing their covered employees to consumer-driven health plans, according to a new survey.
The National Business Group on Health (NBGH) found that 32% of employers surveyed would only offer CDHPs, compared with 22% this year and about 10% as recently as 2010.
The moves are being made despite the fact that most employers expect to see overall health premiums for group plans increase 6.5% for the 2015 policy year from this year. That’s a slower rate of inflation than the 7% employers saw this year.
But, employers are hoping to limit their health premium outlays to only 5% this year by making changes to their plans, such as:
- Increasing cost-sharing provisions,
- Implementing and expanding CDHPs, and
- Broadening their use of wellness programs and centers of excellence.
The survey, based on responses from 136 of the nation’s largest corporations, was conducted in June.
“Our survey shows that many employers are, in fact, taking necessary steps to rein in costs,” said Brian Marcotte, president and CEO of the NBGH. “This includes partnering with workers to engage in health care decisions and educating them to be better health care consumers, as well as sharing more costs with workers and narrowing their benefit options.”
The survey found that employers are making numerous changes to their benefit plans in an effort to control costs as well as comply with the Affordable Care Act and stay below the excise tax set to be implemented in 2018. The so-called Cadillac tax will levy a 40% tax on any employer policy that costs more than $10,200 per employee (or $27,500 per family).
Employers plan to deal with this by:
- Adding or expanding tools to encourage employees to be better health care consumers (73% of respondents).
- Implementing or expanding CDHPs (57%).
- Adding or expanding wellness program incentives (53%).
- Offering only a CDHP to their employees (32%).
- Implementing or expanding CDHPs (57%).
Because they have high deductibles, CDHPs incentivize employees to use health care services more efficiently. At the same time, they appeal to employers because, due to their design, they are much less expensive to offer than more traditional plans.
Typically, CDHPs are attached to a health reimbursement arrangement or health savings account, because the accounts may help offset higher out-of-pocket costs.
The main objective with CDHPs is to help employees take responsibility for their health care decisions by using a pot of money from employer and employee contributions each year to pay for their medical expenses. Once that pot of money runs out, they’ll need to pay for their medical expenses until they reach their deductible.
For example, a doctor may order that an individual undergo a CAT scan. At that point it would be up to the enrollee to shop around for the best price. In one such case, an individual received three quotes of $750, $1,050 and $1,950 for the same procedure. The individual was able to further bargain down the $750 quote to $500.
Had he not shopped around and simply relied on his doctor’s advice, which was to send him to the even more costly hospital-affiliate facility downstairs from his office, he would have paid more than $2,000 for the CAT scan.
Private health care exchanges get little play
The same NBGH survey found that the one of the latest developments in the health care arena – private health insurance exchanges – are so far generating little interest.
It found that only 2% of the large employers surveyed had shifted their employee coverage to private exchanges this year, while just 1% said they planned to make the change in 2015.
Private exchanges operate much like the public exchanges created by the ACA, by offering employees a choice of a number of plans at different price levels from various insurance companies.
A key reason for that low level of employer interest in shifting their coverage to exchanges, at least for now, is that employers are not yet convinced that exchanges will be more effective in controlling costs than the employers themselves are.
For example, only 11% of respondents said they were very confident that exchanges will control costs better than they are now are doing.
Other cost-control methods
The survey delved into other ways employers are trying to control costs:
- Narrow networks: Only 26% include a narrow network in any of their plans. Narrow networks have limited numbers of doctors and the notion is that because of the limited choice, the plans are cheaper.
- Specialty pharmacy benefits: Some employers are adopting techniques specific to specialty medications to help control costs. One-third use a freestanding specialty pharmacy, while 29% only approve coverage for a 30-day initial supply.
- Weight management: 73% of employer-sponsored plans will cover surgical interventions for the treatment of severe obesity, while 41% will cover Food and Drug Administration-approved medication. Both are increases from the percent of employers that cover these this year.