Both National Business Group on Health and Benefits Selling Surveys echo change...
Two recent surveys of US employers reflect the changes many companies are making to their health benefits in response to the Affordable Care Act.
The National Business Group on Health (NBGH), a non-profit association of nearly 400 large employers, survey finds employers estimate their costs would increase 6/5% in 2015 if they made no changes to their health plan, and 5% with planned changes.
The survey, based on responses from 136 of the nation's largest companies in June 2014, also found that those employers offering their employees a consumer-directed health plan (CDHP) as the only health benefits option is expected to surge by nearly 50% next year.
Employers expect to keep cost increases to 5% with the changes they are putting into place, such as increasing cost-sharing provisions, implementing and expanding CDHPs, and broadening their use of wellness programs and Centers of Excellence.
“Despite the many distractions that the Affordable Care Act (ACA) has created, large employers haven’t lost sight of the fact that rising health care costs remain a significant issue that needs to be constantly addressed,” said Brian Marcotte, president and CEO of the National Business Group on Health. “Our survey shows that many employers
are, in fact, taking necessary steps to rein in costs. This includes partnering with workers to engage in health care decisions and educating them to be better health care consumers, as well as sharing more costs with workers and narrowing their benefit options.”
Yet in the Benefits Selling survey, Loretta Camp,
principal of Davidson and Camp Insurance Services in San Antonio, TX said, “I think the biggest hurdle for employers today is making sure our employees understand how to review their benefit options, comparing group plans and individual opportunities both on and off exchange and to quell some of the panic over how the media — and misinformed
consumers — is now portraying how horrible health care plans now are because of [PPACA],”
The NBGH survey echoes this, showing that employers are making many significant changes to their benefit plans in an effort to control costs as well as comply with the ACA and stay below the excise tax set to be implemented in 2018. Nearly three in four respondents (73%) are adding or expanding tools to encourage employees to be better health care consumers.
It also found that more than half (57%) are implementing or expanding CDHPs while 53% will either add or expand wellness program incentives. Perhaps the most significant finding is the nearly 50% increase in the number of employers that plan to offer a CDHP as their only benefit plan option next year. Almost one-third (32%) plan to do this in 2015,
compared with 22% this year.
While no employers have or intend to eliminate health benefits coverage for their active employees next year, interest in private exchanges is growing, though slowly. By next year, 3% of large employers will provide their active employees with health insurance through a private exchange while 35% said they are considering doing so for 2016 or beyond. Meantime, 14% of respondents are partnering with a private exchange for their retirees, an increase from 10% last year. Another 7% are planning to move retirees to private exchanges next year.
The survey, however, revealed mixed views from employers in their confidence that private exchanges will perform better than their own benefit plan. For example, 77% are confident in the exchanges’ ability to provide more choice of plans while 51% said exchanges will do a better job complying with regulations. However, only 17% are confident that exchanges can do a better job of engaging employees in better health care decision making and only one in 10 believe exchanges will control costs better than their own plans.
“Employers, including many of our members, are clamoring for information and help in understanding private exchanges and whether they make sense for their organizations. The proliferation of private exchanges is presenting employers with an option but one that employers need to ask questions and study carefully. For example, employers will want to determine whether a private exchange can manage costs and care more efficiently than what they are currently doing,” said Marcotte.
The Benefits Selling survey echoed this as well. It found that 70 percent of employers said PPACA
has made them rethink their employee benefit offerings, compared to 30 percent who said the health care reform law hadn’t had any impact on their offerings.
“PPACA definitely changed the way we think about benefits, to the point that we’re actually implementing a marketplace exchange, using Aon’s exchange,” says survey respondent Maggie
Peabody, benefit analyst at Orica, an Australia manufacturing and mining company with global
operations. Peabody is based in Watkins, Colorado.
Oricia is currently going through the implementation process so the firm will be ready to offer its employees a range of plans on Aon’s exchange for 2015. The exchange enables Orica to offer its employees “more choices, freedom and flexibility,” as the firm went from offering one medical plan last year to offering five different plans on Aon’s exchange, she said. The plans range from high-deductible plans combined with HSAs, to richer plans without deductibles, lower copays at time of service, but with higher premiums.
The move also helps Orica comply with the minimum benefit requirements of PPACA, while at the same time lowering costs.
“We knew if we didn’t do something like this, in 10 years our costs would have been just out of
control,” Peabody said in a later interview. “Aon’s exchange enables us to offer a wider range
of plans, because trying to administer five plans on our own would have been a nightmare.”
In the survey, just under a third (30 percent) said they considered moving their employees onto exchanges, compared to 70 percent who haven’t
considered such a move. Most (73 percent) have at least consulted with their broker about the exchanges, while 27 percent had not.
"...offering its employees different supplemental plans “to help fill the gaps...”
As a small employer, Camp found that employees could obtain more affordable plans either through their spouses’ employers, or individual coverage either on or off the exchange, so the firm discontinued its own plan all together.
In some instances the law has driven up costs, but there are still viable plans available, she says. Moreover, the changes have stimulated new and creative approaches in meeting employer and employee needs.
“There is a lot of confusion out there right now, but our employees don’t have to be concerned that everything is going to be taken away from them,” Camp says. “As employers, it’s our responsibility to focus on the meat of the law, keep them informed of pertinent changes, and provide resources for personal assistance. This is just a start, and there will surely be more changes to come, but people need not be fearful.”
In the Benefits Selling survey, another employer who preferred not to be named said that after PPACA’s passage, he chose to keep his staff under 50 to eliminate the requirement to offer health care insurance. In one of the most drastic moves found in the survey, he also turned all of his employees into 1099 independent contractors, “to get me out of the employee business.”
“[PPACA] is the worst thing possible and is destroying the best health system in the world,” he
says. “I only hope we can keep the pieces together to get another administration in place to
cancel and start over again.”
In the survey, nearly two-thirds (64 percent) of respondents said they will be expecting their employees to pick up more of the tab for their own benefits in the coming year, as opposed to 36 percent who did not.
Similarly, 63 percent said their company has considered expanding the use or implementation
of CDHPs, in which employees use health savings accounts, health reimbursement accounts or similar medical payment products to pay for lower-cost health care expenses directly, in conjunction with a high-deductible plan that protects them from catastrophic medical expenses. In the survey, 37 percent did not consider such plans.
Less than half (44 percent) of the respondents said they offer HSAs, while 56 percent don’t. Of those employers offering such accounts:
47 %: said that less than a quarter of their
employees took advantage of this benefit,
27%: between a quarter and a half did,
14%: between a half and three-quarters did,
12%: between three-quarters and all of their employees did.
When asked which benefits were considered most important to their employees, the employers responded:
77 %: major medical health insurance
1%- consumer-driven health plan
2%: life insurance
2%: executive benefits
Survey respondents were also asked about other types of benefits.
Orica previously offered voluntary benefits, but the Aon exchange has a wider array of choices for its employees, Peabody says.
Davidson and Camp is offering its employees different supplemental plans “to help fill the gaps,”
such as hospital indemnity, accident, cancer, critical illness and specified disease plans, in addition to the increased employer-paid life insurance, dental plan, employee assistance program, will preparation service, and travel accident plans, and short-term and long-term disability, Camp says. The firm had been offering such benefits before, but since it
discontinued medical coverage, it decided to enhance these benefits and absorb more of the
Half of the survey respondents said that their company has either already implemented or planned to implement wellness or disease management programs to contain costs, while 50 percent had not.
Peabody says her firm has offered a wellness program with health risk assessments, but for this
year the company is suspending the program because of all of the changes it is implementing.
In 2016, though, Orica plans to launch a new expanded program that includes the use of biometrics to enable employees to receive
Slightly half (52 percent) of the survey respondents offered flexible working benefits, and 68 percent offered retirement benefits.
Most (77 percent) of the respondents said that their employee benefits spending was influenced by the economy, compared to 23 percent who
did not agree.
In the large employer NBGH survey, additional findings included:
• Narrow Networks: Despite recent attention, only one-fourth of employers (26%) include a narrow network in any of their plans. Half of those (13%) offer a plan that incents employees to use a narrow network within the plan.
• Specialty Pharmacy Benefits: Some employers are adopting techniques specific to specialty medications to help control costs. One third (33%) use a freestanding specialty pharmacy while 29% only approve coverage for a 30-day initial supply.
• Weight Management: Nearly three-fourths of respondents (73%) will cover surgical interventions for the treatment of severe obesity while 41% will cover FDA-approved medication. Both are increases from the percent of employers that cover these this year.
The spectrum of companies, from small to large, are responding to the Affordable Care Act with discernible trends toward consumer-driven health plans, filling gaps with voluntary benefits, and workplace wellness programs all in hopes of controlling the cost impact to their bottom lines.
Sources: Annual Survey - National Business Group on Health, August 13, 2014
Benefits Selling 2014 Employer Survey
September 25, 2014
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