Since this site was inspired by health care reform, it seems only fitting that we spent Monday — the day it actually launched! — inside the Beltway. First, Beth Umland, Mercer’s Director of Health & Benefits Research (and a contributor to this site), and I gave a briefing on Capitol Hill for congressional staffers, where we shared Mercer’s latest survey findings on trends in employer-sponsored coverage and employers’ response to health care reform. That afternoon, we invited some of the top health policy experts from Washington, DC, think tanks to sit around a table, flip through Mercer’s survey results, and talk about what might happen in the future as we continue down the ACA implementation path. It’s always interesting for us to see which survey results our Washington audiences find the most significant — or the most surprising. And it’s useful to hear what questions they wished we’d asked. Here are some highlights from our discussions.
Wellness incentives. The ACA increased the amount available for outcomes-based incentives from 20% of plan cost to 30% (50% for non-tobacco use). According to our most recent survey conducted in January 2014, only 2% of employers are using the maximum amount available for tobacco and/or wellness, although 9% increased incentives for 2014 and 37% are considering it.
In both of the meetings, we were asked: Why aren’t more employers using the maximum incentive? To begin with, only 20% of employers currently offer outcomes-based incentives, and the median annual value of the incentive is currently $200 across all employers. Larger employers use bigger incentives — the median incentive value is $475 for employers with 10,000 or more employees — but even that is less than 3% of total plan cost (assuming $15,000 for family coverage).
So there is still a lot of room to increase incentives for those who have the budget before they approach the maximum. Employers that aspire to outcomes-based incentives typically introduce them gradually, beginning with an educational phase in which employees are given incentives to complete a health assessment and biometric screenings. This way, employees will have greater awareness of any health risks before being offered incentives to improve them.
Exit strategy. In the years since the health reform debate began, there have been conflicting predictions about how many employers will decide to drop employer-sponsored health care coverage and send employees to the public marketplace. When we presented Mercer survey data indicating that only 6% of employers with 500 or more employees believe it is likely they will drop coverage in the next five years, someone pointed out that other reports suggest a much higher percentage of employers will move in that direction.
Why the variation? We think it is a matter of who you ask, how you ask the question, and the size and composition of your sample. Mercer’s data is based on responses from benefits professionals at almost 3,000 US employers, and we use a stratified random sample that allows us to examine differences in responses based on size. While smaller employers are more likely to believe they will get out of the game within the next five years, even among employers with fewer than 50 employees, that number only reaches 34%. Check out my post Why Employers Are Choosing to Stay in Health Care for more on this provocative question.
Spousal coverage. There was considerable interest in trends in providing coverage to spouses — or not. Currently, 20% of employers have special provisions for spouses who have access to medical benefits through their own employer: 12% impose a surcharge and 8% exclude them entirely. Another 27% are considering one of these approaches for 2015. We were asked if any employers are considering excluding all spouses — whether or not they have other coverage available — since under the ACA, employers are only required to make the offer of coverage to all full-time employees and dependents not including spouses. We haven’t asked that question in one of our surveys (yet), but we discussed that it might be a more viable approach for employers making a first-time offering of medical benefits — and maybe even a last-resort option for employers that are determined to avoid paying the excise tax in 2018.
Employer mandate. We ended the day with a discussion of the Urban Institute’s recent study that suggests the “gain” from the employer mandate in terms of reducing the number of the uninsured might not be worth the pain of enforcing it, and talked about a subsequent blog post in Health Affairs proposing a different approach to the employer mandate that was considered earlier on in the drafting of the ACA.
Regardless, the general consensus was that repeal — in the short-term, anyway — is unlikely and that change will be more challenging as employers make their way further down the implementation path. This June 10 article in The Washington Post lays out both sides of the argument.
As we reflected back over the past four years, we all agreed on one thing — the ACA has provided the impetus for employers to take on some bold strategies. They have focused on:
- Managing cost and cost increases through plan design changes.
- Providing incentives to drive healthy behaviors.
- Providing access to tools to help plan members be better consumers.
- Forging provider partnerships that reward high-quality care and the best outcomes.
- Leveraging technology and new delivery alternatives.
These are strategies employers had embraced prior to the ACA, and they remain the “right thing to do,” with or without health care reform. The fact that we are seeing the lowest health care trends in years is a testament to that.