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Employers Rapidly Losing Confidence in Their Ability to Offer Health Care
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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:
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.
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:
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.
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.
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.
Employers are also encouraging vendors to coordinate care, implement evidence-based treatments and use emerging technologies aimed at improving quality and efficiency.
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):
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.