Entries in Employers (19)

Friday
Jun162017

A Dozen Takeaways From PwC’s Medical Cost Trend: Behind the Numbers 2018 Report

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By Clive Riddle, June 16, 2017

 

PwC’s Health Research Institute has released Medical Cost Trend: Behind the Numbers 2018, their twelfth annual report projecting the growth of private sector medical costs in the coming year and identifying the leading trend drivers. The findings are largely based upon PwC’s annual Health & Well-being Touchstone Survey results, which draws from responses of 780 employers from 37 industries, and have also just been released.

 

Here’s a dozen takeaways from this year’s 32 page Behind the Numbers report, and 114 page Touchstone Survey report:

 

1.       PwC’s HRI projects a 6.5 percent growth rate for next year, a half percentage point increase from the estimated 2017 rate.
 

2.       This growth rates steadily decreased from 11.9% in 2007 to 6.5% in 2014, and has fluctuated slighly above or below that figure since then
 

3.       PwCs provides this definition of their projected medical cost trend: the “increase in per capita costs of medical services that affect commercial insurers and large, self-insured businesses. Insurance companies use the projection to calculate health plan premiums for the coming year.”
 

4.       PwC's HRI has identified three major inflators expected to impact medical cost trend in the coming year: (A) Rising general inflation impacts healthcare. As the U.S. economy heats up, a rise in general inflation during 2016 and 2017 will likely put upward pressure on wages, medical prices and overall cost trend in 2018; (B) Movement to high-deductible health plans is losing steam. The wave of growth in high-deductible health plans, employers' go-to strategy in recent years to curb health spending, may be plateauing; and  (C) Fewer branded drugs are coming off patent. Employers may have less opportunity to encourage employees to buy cost-saving generics in 2018.
 

5.       PwC's HRI has identified two major deflators expected to impact medical cost trend in the coming year: (A) Political and public scrutiny puts pressure on drug companies. Heightened political and public attention could encourage drug companies to moderate price increases; and (B) Employers are targeting the right people with the right treatments to minimize waste. They are doubling down on tactics such as prescription quantity limits and exploring new technologies such as artificial intelligence to match people with the best treatment.
 

6.       The report also cites these healthcare drivers affecting the 2018 cost trend:  Technology and treatment innovation: Provider and Plan Consolidation; Government regulation; and Evolving Payment models.
 

7.       The report allocated these proportions of costs by component for 2018: Pharmacy 18%; Inpatient 30%; Outpatient 19%; Physician 29%; Other 4%
 

8.       The Touchstone Survey cites that “Medical plan costs have continued to increase, but employers expect that the rate of increase will start to slow. Plan design changes contributed towards slightly lower-than-expected increases in 2016;” and that “the average increase in 2016 was 6.8% before plan design changes and 3.6% after plan design changes. In 2017, participants expect to see a 6.0% increase before plan design changes and a 3.2% increase after plan design changes.”
 

9.       The Touchstone Survey notes that “participants appear to be in a "wait and see" mode – rather than considering broader and more transformational changes, they continue to use traditional cost-shifting approaches to control health spend;” and that “57% of participants expect to continue to increase employee contributions in the next three years, while 38% (29% for Rx) plan to increase employee cost-sharing through plan design changes.”
 

10.   The Touchstone Survey finds that “participants are increasing contributions in the form of surcharges for spouse, domestic partner and dependent coverage. This may be contributing towards a decrease in enrolled family size and slowing the rise in net employer spend.”
 

11.   The Touchstone Survey also finds that “participants are utilizing High Deductible Health Plans (HDHPs) more and Preferred Provider Organizations (PPOs) less, although PPOs remain more popular among employees. PPOs are the highest-enrolled plan 44% of the time, compared to 46% in 2016 and 60% in 2009. HDHPs are the highest-enrolled plan 34% of the time, up from 32% in 2016 and 8% in 2009.”
 

12.   The Touchtone Survey found that employer interest in population health is strong but private exchange interest is waning. They report that “79% offer wellness programs compared to 76% in 2016, and 63% offer DM programs compared to 56% in 2016;” while  “8% of participants are considering moving their active employees to a private exchange; 2% have already done so. Interest seems to have dropped off as the discussions on public exchanges and ACA have increased. However, 36% of participants who offer retiree medical coverage are considering moving pre-65 retirees to a private or public exchange.”
 

 
Friday
Feb192016

Two Employee Benefit Studies Don’t Agree on Everything – But Do Agree on 52% HDHP Adoption

By Clive Riddle, February 19, 2016 

Benefitfocus has just released the “Benefitfocus State of Employee Benefits 2016,” based on benefit selection data from 700,000+ people at 500 large employers, based on actual behavioral versus self-reported data. They cite that 52 percent of large employer clients now offer high-deductible health plans (HDHPs). 

The report notes that “millennials—born between 1980 and 1989—selected HDHPs more than any other age group. However, while approximately 44 percent of employees in this group chose HDHPs, a much smaller number of these employees took full advantage of health savings accounts (HSAs.)”

In addition, the report found that their clients “should be well positioned to navigate the Cadillac tax to be levied on higher-cost health care plans in 2020 under the Affordable Care Act. Total premiums across all 2016 plans averaged $14,974 for family coverage and $6,096 for individual coverage—both well below the tax’s respective target thresholds of $27,500 and $10,200.” 

While voluntary benefits have receiving much publicity as a popular solution and offering in consumer driven plan environments, they report that “only 36 percent of large employers offered such voluntary benefits for 2016, and only 14 percent of employees actually enrolled.” 

Meanwhile, Wells Fargo Insurance  has just released their Employee Benefits Trend Study surveying 650 middle-market companies and large corporations, which painted a somewhat different picture. They found that “fifty eight percent of employers surveyed expect their medical plan costs to exceed the thresholds for the Affordable Care Act (ACA) excise tax, or “Cadillac” tax, which was originally to take effect in 2018, but has been delayed until 2020.” Their findings state that “As more employers offer high deductible health plans, the C-suite is also aware of the financial exposure that employees face with these types of plans. As a result, they are looking to mitigate those costs by offering voluntary benefits solutions (e.g. critical illness and accident insurance).” 

But the Wells Fargo survey did agree to the penny with the Benefitfocus study on one item – HDHP adoption, citing that “half of the employers in the study said they will continue to make changes to their plans either this year or in 2017 by adding a high deductible plan option (52 percent), increasing the employee contribution percentage (56 percent), or increasing co-insurance features (55 percent).

Wednesday
Jun102015

PwC and Milliman Examination of Medical Cost Trends

by Clive Riddle, June 10, 2015

PwC projects a medical cost trend for 2016 of 6.5%, netting down to 4.5% after benefit design changes. Milliman tells us that the 2015 actual trend was 6.3%, up from 5.4% in 2014.

PwC’s Health Research Institute this week released their tenth annual Behind the Numbers report, which includes a “projection for the coming year’s medical cost trend based on analysis of medical costs in the large employer insurance market. In compiling data for 2016, HRI interviewed industry executives, health policy experts and health plan actuaries whose companies cover more than 100 million employer based members.

Milliman released their fifteenth annual Milliman Medical Index report two weeks ago, which is “an actuarial analysis of the projected total cost of healthcare for a hypothetical family of four covered by an employer-sponsored preferred provider organization (PPO) plan. Unlike many other healthcare cost reports, the MMI measures the total cost of healthcare benefits, not just the employer’s share of the costs, and not just premiums. The MMI only includes healthcare costs. It does not include health plan administrative expenses or profit loads.”

With respect to 2015, Milliman found “the cost of healthcare for a typical American family of four covered by an average employer-sponsored preferred provider organization (PPO) plan is $24,671”, up from $23,215 in 2014. The 2015 family costs works out to $2,055 on a monthly basis.

Milliman emphasizes the importance of the role the Rx costs play in the mix. They note “prescription drug costs spiked significantly, growing by 13.6% from 2014 to 2015. Growth over the previous five years averaged 6.8%. The 2015 spike resulted from the introduction of new specialty drugs as well as price increases in both brand and generic name drugs, increases in use of compound medicines, and other causes. Since the MMI’s inception in 2001, prescription drugs have increased by 9.4% on average, exceeding the 7.7% average trend for all other services. Prescription drug costs now comprise 15.9% of total healthcare spending for our family of four, up from 13.2% in 2001.”

Milliman also highlights the role of cost-sharing, citing that the “total employee cost (payroll deductions plus out-of-pocket expenses) increased by approximately 43% from 2010 to 2015, while employer costs increased by 32%. Of the $24,671 in total healthcare costs for this typical family, $10,473 is paid by the family, $6,408 through payroll deductions, and $4,065 in out-of-pocket expenses incurred at point of care.”

PwC also keys on these two issues for 2016 as well, with drugs as an inflator, and cost-sharing as a deflator of the medical trend.  PwC spotlighted two inflators of the 2016 medical trend: (1) New specialty drugs entering the market in 2015 and 2016 will continue to push health spending growth upward; and (2) Major cyber-security breaches are forcing health companies to step up investments to guard personal health data, adding to the overall cost of delivering care.

PwC notes three factors that serve to "deflate" the 2016 medical cost trend: (1) The Affordable Care Act’s looming “Cadillac tax” on high-priced plans which is accelerating cost-shifting from employers to employees to reduce costs; (2) Greater adoption of “virtual care” technology that can be more efficient and convenient than traditional medical care; and (3) New health advisers helping to steer consumers to more efficient healthcare.

PwC also comments on the longer range medical trend perspective, citing four key cost growth factors H observed over the past decade:

  • The healthcare-spending trajectory has leveled off but is not declining;
  • Cost sharing slows consumer use of health services;
  • Curtailing inpatient care lowers costs; and
  • The ACA has had minimal direct effect on employer health costs.
Friday
May292015

Positive Trends in the Land of Retail and Workplace Clinics

By Clive Riddle, May 29, 2015

Last month, the Robert Wood Johnson Foundation commissioned Manatt Health to issue an excellent 25 page report:  The Value Proposition of Retail Clinics, in which they remind us that “since first emerging on the health care landscape more than 15 years ago, retail clinics are now a common feature, with 10.5 million visits occurring annually at more than 1,800 retail clinics.

The report emphasizes the potential for current and future collaborations between retail clinic organizations and health care systems, noting “to date, more than 100 partnerships between retail clinics and health systems have been formed, linking care between retail sites and primary care medical homes, expanding after-hours care options and enabling health systems to provide patients with alternatives to emergency departments (EDs). In fact, one study estimated that up to 27 percent of ED visits could be handled appropriately at retail clinics and urgent care centers…”

With respect to the growth and scope of the retail clinic market, just this month CVS  Health’s MinuteClinic announced they  “will open more than 100 new clinics this year and anticipates surpassing 1,500 clinics by 2017,” and they have reached  the cumulative “25 Million Patient Visit Milestone.“

With respect to partnerships during the past month, California Healthline discussed: ”Kaiser-Target Partnership Sign of Times” and CVS Health announced clinical affiliations with Ochsner Health System in Louisiana and the University of Mississippi Medical Center, including their Center for Telehealth.

Meanwhile, on the workplace onsite clinic front, Towers Watson this week released their 2015 Employer-Sponsored Health Care Centers Survey report, which polled  137 U.S. employers in which 105 currently offer employer-sponsored health centers, and 15 are planning to offer by 2018, and represent 4.6 million employees.

Here’s some highlights of Towers Watson’s onsite clinic findings:

  • 38% of large U.S. employers with onsite health facilities plan to add new centers over the next two years,
  • 66% expect to expand or enhance the already broad services they offer by 2018
  • Wellness programs are already available at 86% of the centers
  • Lifestyle coaching to promote and reinforce behavior changes is currently offered at 63% of the centers
  • Half of employer-sponsored health centers now offer some type of pharmacy services, up from 38% in 2012
  • 35% offer telemedicine services, with another 12% planning to in the next two years.
  • 40% have two to five centers
  • 56% have had onsite health centers for over five years
  • 55% are open before 8:00 a.m.; 32% are open after 5:00 p.m., and 16% are open on weekends
  • 64% outsource managing staffing and services at the health centers
  • 23% run the centers themselves
  • 18% use local or regional provider groups or health systems
  • 75% employers with onsite health centers calculate their ROI, up from 47% in 2012

One free resource for those monitoring activities in this sector, the Workplace & Retail Clinic Bulletin, offering free twice monthly e-newsletters.

Friday
Apr102015

Accenture Pegs 2015 Private Exchange Enrollment at 6 Million

By Clive Riddle, April 10, 2015

Accenture has released a new report on private exchange enrollment: Private Health Insurance Exchange Enrollment Doubled from 2014 to 2015, which pegs 2015 total private exhange enrollment at 6 million, up from 3 million in 2014.

Accenture forecasts that enrollment in private health insurance exchanges will grow to 12 million in 2016 and 22 million in 2017. They have gone on record projecting "total enrollment in private exchanges to ultimately surpass state and federally funded exchanges, reaching 40 million by 2018."

Here’s more on Accenture’s findings from their report:

  • Accenture concludes that midsize employers, defined as companies with 100 to 2,500 employees, contributed most to the adoption of private health exchanges increase.
  • 76 percent of consumers with employer-sponsored coverage see health insurance as a primary factor for continuing to work at their current employer
  • Accenture points out that this limits some employers’ ability to drop or defund health coverage.
  • Accenture postulates that for such employers, "private exchanges will emerge for some as a compelling model to reduce costs and administrative burden"
  • Accenture notes that private exchange enrollment is expected to accelerate in 2017 due to looming penalties for “Cadillac” Plans.
  • Accenture  also notes that market funding is growing, citing  Aetna’s bswift acquisition of bswift and Mercer’s equity investment in Benefitfocus
  • Accenture further postulates that Accenture expects that "increased compliance requirements .. will drive employers to adopt new models for managing benefits administration."