If you want to know the future of employer-sponsored health care, you only have to look at this finding that literally leaps out from the 16th Annual Towers Watson/National Business Group on Health Employer Survey on Purchasing Value in Health Care:
- 73 percent — the percentage of employers in 2007 who told the Towers Watson survey that they were confident they would be offering health insurance in a decade.
- 38 percent — the percentage of employers who answered the same question in the affirmative in 2010.
Is that an incredibly sharp drop compared to previous reports, or what? It speaks volumes about the outlook for employer-sponsored health care in the era of government mandates and Obamacare.
Must reading for anyone handling health care
This is one of these big, landmark health care surveys that really can give you some insight into what is happening with American health care as organizations everywhere try to figure out that just what the new government mandates mean and what the impact will be on both cost and quality of care.
And just in case you want to pooh-pooh the survey results (an easy thing to do given the flood of polls and surveys out there on every topic from the serious to the ridiculous), consider this: The 16th Annual Towers Watson/National Business Group on Health Employer Survey was completed by nearly 600 employers with more than 1,000 employees that cover 7.8 million employee health care benefits and collectively represent $81 million in total health care expenditures. That qualifies as a decent sample, don’t you think?
Titled The Road Ahead — Shaping Health Care Strategy in a Post-Reform Environment, this survey is must reading for any manager, executive, or HR professional who handles health care, has a role in an organization’s health care strategy, or has responsibility for implementing changes that are needed to deal with the federal government’s controversial health care mandates.
Yes, you really need to spend some time with this survey if you deal with your company’s health care coverage in any way, but here are a few highlights that seemed important to me:
- Managing costs and offer affordable care. In 2011, total health care costs per active employee, on average, are expected to reach $11,176, up from $10,387 in 2010 (a 7.6 percent increase in gross costs). In fact, employers pay 36 percent more for health care, and employees contribute over 45 percent more, than they did five years ago.
On average, employees across all plan types and coverage tiers paid 22.9 percent of total premium costs in 2010. As employers take steps to manage their costs, employees’ share of premiums will increase to 23.8 percent in 2011.
To mitigate costs, employers are redefining their financial commitments to health benefits by redesigning programs to incorporate enhanced point-of-care consumerism, positioning incentives more aggressively, and redefining the employee versus dependent subsidy. Further, coming changes in the pre-65 and Medicare marketplace are fueling some employers to reconsider their commitment to retiree medical sponsorship.
- Setting their sights on bigger changes ahead. While organizations have responded to the initial wave of federal mandates and regulatory changes under the new health care reform law, employers expect even bigger changes in the not-too-distant future with the opening of the insurance exchanges in 2014 and a potential excise tax, which takes effect in 2018.
In fact, 80 percent of respondents expect the excise tax to have at least some impact, and nearly a quarter of respondents believe it will have an extensive impact on their active medical programs, if no subsequent changes are made to their plan designs. Rather than rely on incrementalism, employers are considering significant changes in their health care strategy to stave off the excise tax.
- Improving workforce health. Employers remain strongly committed to improving the health of their workforce. Along these lines, many employers are expanding the use of employee incentives to participate in lifestyle coaching, complete biometric screenings and take advantage of other measures.
For example, some 58 percent of employers are offering cash, premium credits and/or account contributions to their employees to encourage participation in healthy lifestyle activities in 2011 — up from 52 percent in 2010. For the typical company that offers incentives, the maximum amount of cash employees can earn is $300 — a $50 increase over 2010. And among companies that provide incentives, 46 percent are offering them to dependents in 2011, versus only 39 percent in 2010.
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Employers are also encouraging vendors to coordinate care, implement evidence-based treatments and use emerging technologies aimed at improving quality and efficiency.
- Linking benefits, health and productivity. Taking a page from consistent performers’* playbook, more employers are monitoring their health plans and programs, and measuring results. These employers are assessing program performance, pinpointing areas that need improvement and targeting future investments.
Some 60% will have a “rich plan” by 2018
One more key to keep in mind: While the excise tax may be a number of years away, Towers Watson’s research has shown that 60 percent of companies will reach the status of a “rich” plan by 2018 (i.e., plans that cost a total of more than $10,200 for single coverage and more than $27,500 for family coverage in 2018). No wonder so many organizations are so pessimistic about their ability to offer health care coverage to workers in the years ahead.
As Towers Watson’s analysis puts it, “Those companies taking more strategic actions now, for example, through program design and other strategies to drive home improvements in workplace health, will likely have a leg up on other organizations managing health care reform mandates and controlling costs.”
The survey also lists the top health care strategies companies are planning for next year (2012). It gives you a good sense of the issues organizations are already focusing on as they look down the road (the percentages reflect the number of companies mentioning them):
- Stay up to date and comply with the PPACA — 54 percent.
- Develop/expand healthy lifestyle activities — 39 percent.
- Adopt/expand the use of financial incentives to encourage healthy behaviors— 36 percent.
- Revise health care strategy for active employees — 35 percent.
- Review health care benefits as part of total rewards strategy — 23 percent.
A blunt assessment
The summary to the survey was pretty blunt in its assessment of the health care situation:
Health care reform is impacting employers in countless ways. Beyond the immediate cost, compliance and insurance challenges, this landmark legislation provides organizations with an unprecedented opportunity to rethink their role in offering employer-provided health care and the broad-reaching impact — well beyond the health benefits arena — of potential decisions.
To stay in front of these complex issues, employers will need to respond quickly and thoughtfully. These insights, culled from our research and work with clients, are an initial set of actions employers can take right now to manage costs and mitigate risks.”
These insights alone are a worthwhile reason to spend time with this survey, because if you have a stake in your organization’s health care spending and strategy, you really can’t afford not to.