With the cost of employee health care benefits expected to increase in 2012 at more than twice the rate of inflation, large U.S. employers are planning to have workers share more of the cost, according to a survey by the National Business Group on Health, a nonprofit association of 329 mostly large U.S. employers.
The survey, based on responses from 83 of the nation’s largest corporations, was conducted in June 2011. It showed that more employers are adopting consumer-driven health plans and making other changes to their benefit programs as various components of the health care reform law take effect.
Employers estimate that their health care benefit costs will increase an average of 7.2 percent in 2012, according to the survey. That is slightly lower than the 7.4 percent average increase in 2011, but it's on a higher base and outpaces sharply the U.S. economy’s anemic growth and business conditions.
To help control cost increases and begin driving costs down, employers are planning to use a wider variety of cost-sharing strategies in 2012, including:
Increasing the percentage that
employees contribute to the premiums
|53% of respondents|
|Increase in-network deductibles||39%|
|Increase out-of-network deductibles||23%|
|Increase out-of-pocket maximums||22%|
|Source: National Business Group on Health|
“Employers are facing a multitude of challenges posed by rising health care costs, the weak economy and the financial and administrative impact of complying with the new health reform law,” said Helen Darling, president and CEO of the National Business Group on Health. “As a result, employers are being much more aggressive in their use of cost-sharing techniques and cost-control programs and are making certain that employees have more reasons to be cost-sensitive health care consumers.”
Adopting Consumer-Directed Plans
According to the survey, nearly three in four employers (73 percent) will offer employees at least one consumer-directed health plan (CDHP) in 2012, a sharp increase from 61 percent that offered a CDHP in 2011. In addition, 17 percent will have or move to a total replacement CDHP in 2012, where a CDHP is the only plan option.
The most common type of CDHP is a high-deductible plan with a health savings account (75 percent of respondents with a CDHP).
Promoting Family Members' Health
The survey found that more than half of respondents (57 percent) provide employees’ spouses and domestic partners access to telephonic or online weight management coaches, while 54 percent provide access to online weight management tools. Approximately one-third of employers make these programs available to employees’ children.
Complying with Health Care Reform
Respondents were asked what changes they made or are planning to make as regulations from the Patient Protection and Affordable Care Act continue to come into effect. The survey found the following:
• Annual benefit limits. The majority of employers (59 percent) are not making any changes for 2012 (full restrictions on benefit limits will be banned in 2014). However, more than one-fourth (27 percent) are making changes to annual limits for preventive and wellness services. Another 14 percent are making changes to annual limits for mental health and substance abuse services.
• Grandfather status. Nearly one-fourth (23 percent) will have at least one plan option that keeps its grandfather status in 2012, while 19 percent will drop grandfather status. About one-half (49 percent) did not have any plan option in grandfather status in 2011.
• Default plan for new hires. More than one-fourth (27 percent) expect to use their least costly health plan for employees as their default plan for new full-time hires as required in 2014. Slightly fewer (19 percent) plan to use the least costly plan for employers as the default plan.
“Employers understand that affordability is tied to employees’ premium costs and household incomes, so they have two strong arguments for aggressively driving down costs—both theirs and employees," said Darling. "That said, the federal government has to start helping reduce costs, too. Like the national debt crisis that we are struggling to solve, we have to solve the health care cost crisis, which is seriously undermining our economy, businesses’ abilities to create jobs, working families, our global competitiveness and our standard of living. This is our other national crisis, and they are so intertwined that if we don’t reduce costs and medical [cost] trend, we will continue to barrel toward insolvency,” she concluded.
Stephen Miller, CEBS, is an online editor/manager for SHRM.