Health-benefit costs rising and companies want you to pay
Get ready to become a better health-care consumer.
Large employers are embracing consumer-driven health care in a big way for 2015, betting that they can drive down health-care costs by putting workers in the driver's seat.
The nation's largest employers are projecting health-benefits costs will rise 6.5 percent in 2015, according to a new survey from NBGH. But the firms expect to keep their own cost increase to just 5 percent, by moving to lower-premium plans, and shifting more costs onto employees. The findings are based on responses from more than 130 large corporations.
"There's this wake-up call that we need them engaged," said Brian Marcotte, president and CEO of the National Business Group on Health, speaking about the forces behind the shift. "It comes with a combination of high-deductible plans, decision-support tools and incentives to recognize some of the great resources that exist out there to help you navigate the health-care system."
"The trend that you're looking at for next year, is really about the underlying challenges of health care," Marcotte said.
More than half of the companies surveyed plan to offer more lower-cost, high-deductible plan options in 2015. Nearly one in three firms—32 percent—will offer only high-deductible plans next year. That's up from just 22 percent of firms in 2014.
But some benefit advisors say employers are also looking at low-cost plans, in order to meet Obamacare requirements that start next year. Under the Affordable Care Act, employers must offer plans to full-time workers that cost less than 9.5 percent of their income, in order to be in compliance.
"This idea of offering a qualifying affordable plan is purely that—offering it. It doesn't matter whether employees actually take it," said Joseph Kra, a partner with benefit advisory firm Mercer, a unit of Marsh and McClellan. "As long as they've offered a qualifying plan, they won't have any shared-responsibility penalties."
You'd better shop around
Even employers who will continue to offer traditional health plans are prodding workers to be better consumers. Benefits advisors say employers are making a big push to use price transparency and comparison tools from firms such as Castlight Health and insurers like UnitedHealth, along with incentives to encourage workers to save.
"A company may provide a share of the cost savings if an employee finds a cheaper place to have a procedure … or uses an urgent care facility rather than go to an emergency room," explained Christopher Ryan, vice president of strategic advisory services at payroll processing firm ADP. "There are a number of financial incentives for people to shop around."
Employers themselves have an incentive to get employees involved in reining in benefit costs now, because in 2018, high-cost plans with rich benefits will incur an excise tax under the ACA. Roughly 40 percent of large employers now could be subject to the so-called Cadillac Tax, according to Mercer.
"Employers often do not want to cost-shift to employees, and to the extent that they could drive down the cost of care and employees need less health care because they're well, they're taking care of themselves," explained Mercer's Kra, "all those types of intervention help mitigate the excise tax."
Some changes on hold
Employers are also leery of pushing workers too far. Last year UPS made headlines when it said it would no longer offer coverage for spouses who could get insurance elsewhere. According to NBGH, only 1 percent of firms surveyed said they planned to cut spousal coverage in 2015.
Large employers are also taking a slow approach when it comes to switching to defined benefit plans on private health insurance exchanges. Last year, Time Warner and IBM moved their retirees to private exchanges. In 2015, one in five large companies will do the same.
When it comes to active employees, NBGH's Marcotte said we may see more firms like Walgreen make the move to defined contributions, but most large companies are waiting to see whether private exchange providers such as Mercer, Aon Hewitt, and Towers Watson can prove that they actually bring down costs.
"There's a lack of confidence around their ability to control costs, and their ability to engage their employees with health-care decision-making," he said.
Last year, trying to understand Obamacare was a big distraction for large companies, Marcotte said. This year, they've shifted their focus back to using their size to leverage better prices from insurers and providers to help control costs.
"I've always viewed employers as the market agitators in health care," he said. "They're the ones pushing the needle and trying different things."