Trends Shaping Health Benefits Today
EMPLOYER ACTIONS HELPED TO SLOW COST GROWTH
At first glance, the current health benefit cost trend looks like a good news story. And it is – after decade of cost increases running at 6% or higher, starting in 2012, employers have held growth in the average per-employee cost of health benefits to about 3% annually.
While a number of factors contributed to the cost slowdown, it’s notable that it began about the time that employers began taking steps to reduce their risk of triggering the ACA’s excise tax on high-cost plans. Cost-shifting and consumerism have definitely been part of the story of the lower cost trend.
The year-over-year cost growth trend reflects all changes employers make to hold down their cost increases. But each year the survey also asks employers how much cost in their largest medical plan would increase if they made no changes. As this “underlying trend” shows, if employees simply renewed their plans each year without making changes or changing vendors, cost would have risen about 6% annually since 2012. The difference between the actual cost increase and the underlying trend suggests how much employers do to manage cost.
Results vary widely.
BEHIND THE AVERAGE
Of course, not every employer makes changes every year. It’s important to remember that behind the national average cost increase there’s a lot of variation. While some employers experience flat cost or even cost decreases, others have must absorb very high increases.
Smaller employers – those with 10-499 employees -- were the most likely to experience big increases in 2017. Larger employers, typically self-insured, have more leverage in the market and more resources to devote to cost management – but still, 19% of employers with 500 or more employees, and 11% of those with 20,000 or more employees reported increases of more than 10%.
IMPORTANCE OF A THRIVING WORKFORCE
Increase in uninsured will put pressure on cost growth
There are many factors that drive up healthcare cost: Advances in medicine and technology result in expensive new treatments, and the aging of the population and
What will put new pressure on cost in the years ahead is growth in the number of uninsured. Since 2008 we’ve seen the uninsured rate drop, but that changed in 2017. More uninsured people means more uncompensated care for providers, and those costs will be passed onto employer plans.
But even though managing health benefit cost is a business imperative, so is having a thriving workforce. That means workers who are attending to all facets of well-being: physical, emotional, and financial. Thriving employees have lower healthcare costs, stick around longer, and are more productive.
Employers need to manage benefit cost and help employees thrive. These two goals may sound as if they are in opposition – but they don’t have to be. Employers can slow cost growth while helping their employees to receive better care and a better patient experience. The healthcare system is primed for disruption: Cost is high while satisfaction is low. At the same time, technology is advancing at lightning speed and consumers are looking for more immediate, personalized, and memorable healthcare experiences.
NEW ROADMAP: VITALS FOR CHANGE
Mercer’s roadmap is a forward-looking framework that capitalizes on the opportunities in all the disruptive innovation going on in the health system – and leverages the power that employers have to make the market work better for them and their employees.
We’ve identified four vital areas of focus: Value, quality, consumer experience, and disruption. Employers are already using these concepts to improve their own