By Clive Riddle, August 22, 2014
Towers Watson has just released results from their annual Health Care Changes Ahead Survey which “offers insights into the focus and timing of U.S. employers’ plans and perspectives related to their health benefits, and their efforts to better manage costs and employee engagement.”
Their headline takeaway? “U.S. employers expect a 4% increase in 2015 health care costs for active employees after plan design changes… If no adjustments are made, employers project a 5.2% growth rate.
Towers Watson’s Randall Abbott tells us “in the current economic climate, affordability and sustainability remain dominant influences on employers’ overall health care strategies. Expense management and worker productivity are equally critical to business results. While employers are committed to providing health care benefits for their active employees for the foreseeable future, persistent concerns about cost escalation, the excise tax and workforce health have led to comprehensive strategies focused on both year-over-year results and long-term viability for health care benefits and workforce health improvement. The emphasis is on achieving or maintaining a high-performance health plan. And CFOs are now focused on a new gold standard: managing health cost increases to the Consumer Price Index. This requires acute attention to improving program performance.”
Here’s some key employer responses from their survey findings:
- 73% of employers said they are somewhat or very concerned they will trigger the excise tax b
- 43% said avoiding the tax is the top priority for their health care strategies in 2015.
- 81% plan moderate to significant changes to their health care plans over the next three years
- Pharmacy-only cost trend is projected to be 5.3% after plan changes (6% before changes)
- 48% are considering tying incentives to reaching a specified health outcome such as biometric targets during the next three years ( 10% intend to adopt it in 2015)
- 37% are considering offering plans with a higher level of benefit based on the use of high-performance or narrow networks during the next three years (7% in 2015)
- 34% of employers are considering telemedicine during the next three years (15% in 2015)
- 33% are considering significantly reducing company subsidies for spouses and dependents during the next three years (10% have already done so; 9% intend to do so in 2015)
- 26% are considering spouse exclusions or surcharges if coverage is available elsewhere during the next three years; (30% already do so; 7% expect to add it in 2015)
- 30& are considering caps on health care coverage subsidies for active employees, using defined contribution approaches during the next three years (13% already have them; 3% are planning them for 2015)
- 50% are considering full-replacement ABHPs (Account Based Health Plans) during the next three years: (17% offer only an ABHP today; 4% intend to do so for 2015, and another 28% are considering it for 2016 or 2017)
- 76% are exploring the use of personalized digital technologies, including mobile health applications and fitness wearables
Towers Watson included a number of questions measuring the private health insurance exchange opportunity:
- 28% have extensively evaluated the viability of private exchanges
- 24% said private exchanges could provide a viable alternative for their active full-time employees in 2016.
- 64% said evidence private exchanges can deliver greater value than their current self-managed model would be a top decision factor
- 34% said adoption of private exchanges by other large companies in their industry would be a top decision factor
- 26% said an inability to stay below the excise tax ceiling as 2018 approaches would be a top decision factor
- 99.5% have no plan to exit health benefits for active employees and direct them and their families to public exchanges, with or without a financial subsidy.
- 77% are not at all confident public exchanges will provide a viable alternative for their active full-time employees in 2015 or 2016.
Of course it should be noted Towers Watson has their own private exchange product, OneExchange, that serves more than 1,100 employer clients with active employee and retiree options. Towers Watson just announced that during “the first half of 2014, 45 major U.S. employers launched OneExchange for full-time, part-time or retired employees. This is the largest number of employer implementations outside the typical fall enrollment period in the private exchange’s eight years of operation.” Major new clients they listed included GameStop; International Paper; Northrop Grumman; and the State of Rhode Island.