The National Business Group on Health and Towers Watson recently released their 17th annual survey (pdf) on employers and how they purchase value in healthcare, and this year's survey revealed several new and emerging trends.
The report, which collected data from 512 employers, looked at how employers provide and manage health benefits for their workforce and what it means for the healthcare industry at large.
1. Employers are emphasizing employee accountability in healthcare costs. Average total healthcare costs per employee reached $10,982 in 2011, and that number is expected to increase to $11,664 in 2012. Employers are looking to combat their ever-increasing costs by emphasizing employee accountability measures, such as increasing employee contributions, offering high-deductible health plans as a default option or restricting the use of brand-name drugs.
2. Affordability issues are a growing challenge. Employees' share of their premium costs are also on the rise, as the average employee paid $2,529 in healthcare expenses last year. According to the report, the big out-of-pocket increase is due to the subsidy shifts for dependents, as roughly half of companies increased employee contributions in tiers with dependent coverage.
3. Employers that have maintained cost increases follow "HEALTH." Employers that have been able to keep healthcare costs from sharp increases have followed "HEALTH," which looks at six core areas: health improvement, engagement, accountability, linking provider strategies, technology and healthy environment.
4. Healthcare benefits are here to stay now, but long-term confidence is waning sharply. While employers said they are committed to providing healthcare benefits to their current employees, prospective employees may not have the same fate. Currently, 23 percent of companies are "very confident" they will continue to offer healthcare benefits for the next 10 years — a major drop from 73 percent in 2007.
5. Health insurance exchanges could impact retiree medical plans. Health insurance exchanges will come to fruition in 2014, assuming the Patient Protection and Affordable Care Act stands in the Supreme Court, and this outlet may cause many employers to stop sponsoring retiree medical programs. However, some employers will offer alternatives to make it easier for seniors to buy insurance in the exchanges. Overall, six out of 10 employers see subsidizing healthcare benefits for retirees as an important factor to their healthcare strategies.
6. Roughly 25 percent of employers plan to review healthcare benefits and total rewards. A quarter of employers said in the survey they plan to review healthcare benefits as part of their total rewards programs on critical employee behaviors and actions, such as retention or engagements.
7. Employers are looking to improve health plan vendor transparency and accountability. Employers are demanding more from their health plan carriers in two main areas: helping employees manage their own care better and providing more transparency in healthcare prices and quality.
8. Use of account-based health plans is rising but is not a silver bullet. ABHPs, which include plans such as health savings accounts, are on the rise as 59 percent of companies indicated they have an ABHP in place, and another 11 percent expect to add one by 2013. However, employers are expecting massive enrollment into these plans to gain the most significant savings.
9. Employers expanding incentives to manage health. Roughly two-third of employers offer incentives and financial rewards to employees and their spouses to encourage participation in health management programs. "This is hardly surprising since competitive pressure and the pace of change have increased the demands on everyone at all levels of any company," according to the report.
The report, which collected data from 512 employers, looked at how employers provide and manage health benefits for their workforce and what it means for the healthcare industry at large.
1. Employers are emphasizing employee accountability in healthcare costs. Average total healthcare costs per employee reached $10,982 in 2011, and that number is expected to increase to $11,664 in 2012. Employers are looking to combat their ever-increasing costs by emphasizing employee accountability measures, such as increasing employee contributions, offering high-deductible health plans as a default option or restricting the use of brand-name drugs.
2. Affordability issues are a growing challenge. Employees' share of their premium costs are also on the rise, as the average employee paid $2,529 in healthcare expenses last year. According to the report, the big out-of-pocket increase is due to the subsidy shifts for dependents, as roughly half of companies increased employee contributions in tiers with dependent coverage.
3. Employers that have maintained cost increases follow "HEALTH." Employers that have been able to keep healthcare costs from sharp increases have followed "HEALTH," which looks at six core areas: health improvement, engagement, accountability, linking provider strategies, technology and healthy environment.
4. Healthcare benefits are here to stay now, but long-term confidence is waning sharply. While employers said they are committed to providing healthcare benefits to their current employees, prospective employees may not have the same fate. Currently, 23 percent of companies are "very confident" they will continue to offer healthcare benefits for the next 10 years — a major drop from 73 percent in 2007.
5. Health insurance exchanges could impact retiree medical plans. Health insurance exchanges will come to fruition in 2014, assuming the Patient Protection and Affordable Care Act stands in the Supreme Court, and this outlet may cause many employers to stop sponsoring retiree medical programs. However, some employers will offer alternatives to make it easier for seniors to buy insurance in the exchanges. Overall, six out of 10 employers see subsidizing healthcare benefits for retirees as an important factor to their healthcare strategies.
6. Roughly 25 percent of employers plan to review healthcare benefits and total rewards. A quarter of employers said in the survey they plan to review healthcare benefits as part of their total rewards programs on critical employee behaviors and actions, such as retention or engagements.
7. Employers are looking to improve health plan vendor transparency and accountability. Employers are demanding more from their health plan carriers in two main areas: helping employees manage their own care better and providing more transparency in healthcare prices and quality.
8. Use of account-based health plans is rising but is not a silver bullet. ABHPs, which include plans such as health savings accounts, are on the rise as 59 percent of companies indicated they have an ABHP in place, and another 11 percent expect to add one by 2013. However, employers are expecting massive enrollment into these plans to gain the most significant savings.
9. Employers expanding incentives to manage health. Roughly two-third of employers offer incentives and financial rewards to employees and their spouses to encourage participation in health management programs. "This is hardly surprising since competitive pressure and the pace of change have increased the demands on everyone at all levels of any company," according to the report.
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