Despite dealing with uncertainty in the country's health care system and rising costs, most employers say they plan to keep offering their employees health benefits, though they'll look for other ways to cut costs, according to new research.
Most employers—at 88 percent—affirmed their commitment to offer health care benefits to their active employees for the foreseeable future, according to a survey of 440 midsize to large companies by Towers Watson released Monday. That's in part because most employers say they lack confidence in state exchanges set up by health reform.
The survey projects the total cost of health care to rise 5.3 percent in 2013, to $11,507 per employee. That's a relatively slow increase; by comparison, 2012 saw a 5.9 percent increase.
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"Affordable health care remains a top priority for employers and a key component in employee value propositions," says Randall Abbott, senior health care consulting leader at Towers Watson. "However, due to the increasing costs of medical benefits and the additional burden of compliance, business leaders need to keep the pressure on to control costs, increase workforce accountability and engage workers to lead a healthier lifestyle."
To do so, companies say they're planning or considering changing plan options (63 percent), significantly reducing subsidization of coverage for spouses and dependents (38 percent), and using spousal waivers or surcharges (29 percent).
Additionally, many employers will pass along a greater percentage of costs to employees. Thirteen percent plan to increase their employees' share of health care of premiums in 2013 by five percentage points or more, while 42 percent plan to increase employees' share by one to five percentage points.
Other trends
The adoption of account-based health plans—which include health savings accounts and health reimbursement accounts—is continuing to grow. By 2015, 80 percent of employers plan to offer an ABHP, up from 61 percent in 2013. The enrollment within ABHPs continues to increase significantly, moving from single-digit numbers in 2006 to an expected 30 percent for employers offering these plans in 2013.
The survey also finds there's an increase in telemedicine services. Seventeen percent plan to offer telemedicine by 2013, and another 27 percent are considering offering it by 2014 or 2015. Consulting a doctor by phone or e-mail is cheaper than visiting one in person.
Impact of health reform
Roughly two-thirds of companies say the Supreme Court's decision to uphold the Patient Protection and Affordable Care Act has influenced their overall health strategy. And a third are waiting for the upcoming elections or the opening of insurance exchanges before making any significant changes to their health care strategy, the survey finds.
Most employers, though, say they don't trust health care exchanges, with nearly three-quarters saying they lack confidence that the exchanges will provide a "viable alternative for active employees" by 2015.
But while relatively few companies are likely to direct active employees to exchanges in the near term, the story for retirees is different. Nearly six out of 10 of companies with a program are somewhat to very likely to discontinue retiree medical plan sponsorship for post-65 retirees, with 64 percent considering the same for pre-65 retirees.
Most employees (83 percent) say they're planning to take steps to control their costs to avoid the health care reform excise tax. The $11,507 total cost represents an employer cost of $8,911 per employee and an employee cost of $2,596 per employee. While the increase in employee cost sharing is modest, it is meaningful to employees, as it outpaces average merit increases, the survey says.
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