Early results from a Mercer survey made headlines this week with the news that employers are projecting that per-employee health benefit cost will rise by an average of 4% next year after they make planned changes. That’s in line with the moderate cost increases we’ve been seeing over the past few years. What was more eye-opening was finding that underlying cost growth -- the change in cost employers would see if they made no changes -- has slowed to just 5.5%. That’s a gap of just 1.5 percentage points -- the smallest we’ve seen yet.
What does that mean? For one thing, it suggests that plan members might not see major increases in deductibles and out-of-pocket maximums. Employers have been pretty aggressive with cost shifting since the ACA was passed six years ago, and many feel they have gone as far as they want to go for now. The initial plan design changes required by the ACA added cost, driving up deductibles and out-of-pocket maximums as employers sought to absorb the increases. Since then, employers have been working to ensure their future costs stay below the threshold that would trigger the 40% excise tax.
The new survey results suggest these efforts are working to hold down underlying cost growth. That, along with the delay in the excise tax implementation date (and the potential for repeal), has given employers some breathing room. In 2017 we can expect to see them continue to nudge workers to move to lower-cost plan options. That nudge will likely take the form of a bigger difference in the employee contribution or maybe a little more funding in a health savings account. Most employers remain reluctant to offer a high-deductible plan as their only plan, but they have made progress in getting people to move to them.
You can find the press release with the preliminary survey findings here. Full survey results will be released later this year.