The nation's largest companies expect the cost of their health care benefits to rise an average 7% in 2013, according to findings released Monday by the National Business Group on Health.
Although the rate is a slight dip from earlier years, employers are eyeing a variety of cost-control measures.
While the majority - 60% - plan to slightly increase the percentage of the premium paid by employees, these employers are counting on consumer-driven health plans and wellness initiatives to stem costs. They're also boosting financial incentives to engage workers in healthy lifestyles.
This is a major change from last year, when employers cited cost-shifting as the most effective measure to control costs.
"Despite keeping cost increases steady for next year, providing high quality, affordable health care remains a top priority for employers. HR leaders need to keep the pressure on to control health care cost increases, increase consumerism and individual accountability, use all of the tools and resources available to empower consumers to be wiser purchasers and support them to choose healthier lifestyles. At the same time they must continue to stay on top of the ever changing regulatory environment, and adapt the design of their health plans as necessary,” said NBGH President and CEO Helen Darling, who spoke Monday before the National Press Club in Washington, D.C.
Bottom line, Darling emphasized, employees will be increasingly on the hook for identifying their own risk factors and for doing their part to control rising benefits costs. According to the survey, 43% of employers cited a CDHP as the most effective cost-control tactic followed by wellness programs (19%). Less than one in 10 (9%) respondents reported increased employee cost-sharing as the most effective tactic.
The NBGH survey of companies that range from less than 10,000 full-time employees to more than 100,000 also parallels several recent surveys of employers of all sizes that there may be a slight decline in the number that offer employer-sponsored health insurance. Beyond a decade, that number may increase, Darling said, but in the near-term, only a fraction of employers are looking to drop benefits (reports estimates range from 1% to 30%).
Instead, they'll concentrate on ways to help employees keep their benefits at an affordable price. But workers will need to change their lifestyle.
"There’s a movement now towards paying employees to participate in health improvement programs or to make changes that will give them a healthier lifestyle. Employers generally continue to experiment with and perfect the best ways to incorporate financial incentives into their wellness programs."
Darling said that in 2013, the median amount that an employee can earn by living a healthy lifestyle and/or participating in a wellness program will increase to $450 – that's a 50% jump from $300 this year.
The survey found that employers – in their efforts to engage employees in healthy behaviors and lifestyles – continue to experiment with and perfect the best ways to incorporate financial incentives into wellness programs. While nearly half of respondents (48%) use incentives to encourage participation in programs, some employers are basing incentives on specific health outcomes. More than four in 10 (44%) provide an incentive based upon tobacco-use status while three in 10 (29%) base awards upon achievement of outcomes such as BMI or cholesterol levels. Just under one-fourth of respondents (22%) take a different approach – applying surcharges to employees for not participating in certain programs.
Changes as a Result of Health Care Reform
Respondents were asked what changes they made or are planning to make as regulations from the Affordable Care Act continue to come into effect. The survey found the following:
- Annual Benefit Limits: Half of all respondents (50%) indicated they no longer have any annual benefit limits in place, while nearly one-third (32%) reported that they did not make any changes to their annual limits this year. Among employers making changes for 2013, the most common benefits requiring adjustments to their annual limits were mental health and substance abuse (9%) and rehabilitative services and devices (9%).
- Grandfather Status: The majority of respondents (57 percent) did not have any benefit option in grandfather status this year, compared to 49% last year. However, more than one-fourth (27%) will have at least one grandfathered health plan this year.
- Health Insurance Exchanges: More than half of respondents (51%) believe that some retirees might find state health insurance exchanges to be a viable option for health insurance. More than one-third (38%) felt that exchanges could be an option for COBRA plan participants while 35% felt that part-time employees might consider exchanges.
“Rising health care costs continue to plague employers at an alarming rate,” Darling said. “Although cost increases have stabilized somewhat, they are still on a higher base from last year and are simply not sustainable, especially when our nation’s economy and workers’ wages are virtually flat and everybody is struggling.”