According to a new survey by the National Business Group on Health, large U.S. employers are planning to shift higher health care costs to workers next year, thanks largely to cost increases that are more than twice the rate of inflation.
Employers estimate their health care benefit costs will increase an average of 7.2 percent in 2012, which is slightly lower than this year's 7.4 percent average increase. However, it still outpaces economic growth and business conditions, putting many employers in a tough spot.
While employees brace for a bigger share of the benefits tab over the next year, employers look to cost-mitigating strategies like consumer driven health plans, cost sharing and wellness initiatives. The survey also found other changes in benefit programs as various components of the health care reform law take effect.
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To help control increases and drive down costs to avoid the Cadillac tax, employers are planning to use a wider variety of cost-sharing strategies. More than half of employers (53 percent) plan to increase the percentage that employees contribute to the premiums, while 39 percent plan to increase in-network deductibles.Twenty-three percent of employers plan to increase out-of-network deductibles, while 22 percent will increase out-of-pocket maximums next year.
The survey was based on responses from 83 of the nation's largest corporations, and was conducted in June 2011.
"Employers are being much more aggressive in their use of cost sharing techniques and cost control programs, and are making certain that employees have more reasons to be cost-sensitive health care consumers," said Helen Darling, president and CEO of the National Business Group on Health.
As proof of this, 73 percent of employers will offer employees at least one consumer directed health plan (CDHP) in 2012, a sharp increase from 61 percent that offer a plan this year. In addition, 17 percent will have or move to a total replacement consumer directed health plan in 2012. The most common type of CDHP plan is a high-deductible health plan with a health savings account (75 percent).
The survey also found that 57 percent of employers provide employees' spouses and domestic partners access to telephonic or online weight management coaches while 54 percent provide access to online weight management tools. Approximately one-third of employees also make these programs available to employees' children.
Health care reform: Changes and challenges
As part of the survey, employers were asked what changes they made or are planning to make as regulations from the Patient Protection and Affordable Care Act continue to come into effect. The survey found the following:
- Annual benefit limits: The majority of employers (59 percent) are not making any changes for 2012, (full restrictions on benefit limits will be banned in 2014). However, 27 percent are making changes to annual limits for preventive and wellness services. Another 14 percent are making changes to annual limits for mental health and substance abuse services.
- Grandfather status: Twenty-three percent will have at least one benefit option that keeps its grandfather status in 2012 while 19 percent will drop its grandfather status. About one half (49 percent) did not have any benefit option in grandfather status this year.
- Default plan for new hires: Twenty-seven percent plan to use their least costly health plan for employees as their default plan for new full-time hires as required, but only 19 percent plan to use the least costly plan for employers as the default plan.
"Employers understand that affordability is tied to employees' premium costs and household incomes so they have two strong arguments for aggressively driving down costs — both theirs and employees," Darling said. "That said, the federal government has to start helping reduce costs too. Like the national debt crisis that we are struggling to solve, we have to solve the health care cost crisis, which is seriously undermining our economy, businesses' abilities to create jobs, working families, our global competitiveness and our standard of living. This is our other national crisis, and they are so intertwined that if we don't reduce costs and medical trend, we will continue to barrel toward insolvency."
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