First, the good news. Mercer’s National Survey of Employer-Sponsored Health Plans 2019 -- released this week at the HLTH Conference in Las Vegas – found that average total health benefit cost per employee grew 3.0% in 2019 to reach $13,046, for an eighth consecutive year of low single-digit cost growth. For many of us who experienced the high and unpredictable cost increases of the 2000s, this feels like something to celebrate. Certainly, the stable trend represents a lot of effort on the part of employer plan sponsors.
The not-so-good news – and I’m sure you saw this coming – is that benefit cost increases continue to outpace overall inflation, which means that cost management remains an imperative for most organizations. At the same time, concerns about healthcare affordability have made employers increasingly reluctant to use the tried-and-true tactic of raising deductibles and other cost-sharing provisions as a way to keep premium costs down. Instead, many are pursuing innovative strategies that seek to lower cost for plan members as well as for the plan sponsor.
Hitting pause on cost-shifting
When asked about their priorities for the next five years, 42% of large and midsize employers (500 or more employees) identified “addressing healthcare affordability for low-paid employees” as an important or very important strategy. And, in fact, in 2019 most employers of this size hit “pause” on raising out of pocket costs as a way to hold down premium costs: the average individual PPO deductible rose by just $10 in 2019, to $992. Even more telling, some employers that had offered a high-deductible plan with a Health Savings Account (HSA) as the only medical plan reversed course and added a traditional PPO or HMO as an option. This trend was especially notable among employers with 20,000 or more employees: those offering only a high-deductible account-based plan fell from 22% to 16%.
Of course, this doesn't mean HSA plans are going away. Large and midsized employers continued to add high-deductible account-based plans in 2019 (offerings rose 68% to 71%) and enrollment among employers of all sizes rose from 33% of all covered employees last year to 36%. For many employees, an HSA is a smart financial move. But for those with little savings or significant health issues, a plan with pre-deductible copays for office visits and prescriptions might be a better fit.
Innovative solutions empower employees to take charge of their health
As employers look for cost-management strategies that do not shift cost to employees, many are turning to innovative tech-enabled programs that help employees manage chronic conditions or other health needs, such as musculoskeletal conditions, infertility and insomnia. In 2019, 58% of large and midsize employers offer one or more of such targeted health solutions.
The goals of these programs are typically empowerment, convenience and lower costs. For example, a physical therapy app that reminds patients when to do prescribed exercises, provides instructions, and even counts reps could mean fewer trips to a clinic, less out-of-pocket cost for the employee, and a better outcome.
The survey found another surge in telemedicine, with nearly 9 out of 10 employers now offering a program to their members. This tech-enabled service expands access to care and is designed to reduce out-of-pocket spending: Telemedicine visits are typically less than half the cost of an office visit. Utilization is growing, although slowly. Last year, among employers offering telemedicine, on average 9% of eligible employees used telemedicine, up from 8% the prior year, and about one in seven employers reported utilization of 20% or higher.
Importantly, 41% of large and midsize employers say that all or most of their benefit offerings are accessible to employees on a single, fully integrated digital platform (most often through a smartphone app), up sharply from 34% in 2018. Employers know, from hard experience, that if it’s not easy for employees find these resources when they need them, they simply won't get used.
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