SOURCE: National Business Group on Health

August 28, 2013 10:00 ET

Large U.S. Employers Project a 7% Increase in Health Care Benefit Costs in 2014, National Business Group on Health Survey Finds

Some Employers See Health Exchanges as Viable for Certain Populations

WASHINGTON, DC--(Marketwired - Aug 28, 2013) - The cost of providing employee health care benefits at the nation's largest employers is projected to increase 7% in 2014 -- the third consecutive year employers have budgeted this amount, according to a new survey by the National Business Group on Health, a non-profit association of more than 265 large U.S. employers. The survey -- one of the industry's first look at costs and plan design changes for 2014 -- also found that some employers believe health insurance exchanges could be a viable option for certain populations. Additionally, more companies plan to offer workers a consumer-directed health plan as their only health benefits option in 2014.

According to the survey, employers expect their employee health care benefits costs will increase by an average of 7 % in 2014. That's the same increase they budgeted both this year and last. Despite being able to keep cost increases "stable" for another year, employers continue to embrace changes designed to engage workers in health management and healthy lifestyles. The survey, based on responses from 108 of the nation's largest corporations, was conducted in June, 2013 prior to the Obama administration's decision to delay for one year the implementation of the employer mandate.

"Rising health care costs remain a serious concern for U.S. employers," said Helen Daring, President and CEO of the National Business Group on Health. "Employers spent considerable time and energy this year designing health plans that comply with the various provisions of the Affordable Care Act that would have become effective next year. And while the decision to delay provisions related to the employer mandate has provided respite from some of these requirements, the pressure remains on employers to lower costs. Interestingly, many respondents indicated that a portion of their budgeted costs for 2014 was to implement changes mandated by the ACA. With the delay, it is unclear how employer costs will be affected."

While large employers will not be eligible to participate in state health exchanges until 2017 at the earliest, employers expect that certain populations may find exchanges to be a viable option on an individual basis in 2014. Roughly four in ten (41%) employers believe COBRA plan participants might find public health exchanges to be the most cost effective option. Additionally, more than one fourth (26%) felt that some pre-65 retirees might opt to join exchanges, while 20% believe that some part-time employees will do the same.

"Private exchanges are another option some employers are considering. In the last year, there has been an increase in the number of private exchanges that are being launched. And while some employers are considering private exchanges for active employees sometime in the future, very few (3%) are considering eliminating health care coverage entirely," said Darling. 

More Employers Embracing Total Replacement CDHPs
The survey found that implementing a consumer-directed health plan (CDHP) was considered the most effective tactic to control rising costs, cited by more than one-third of respondents (36%). In fact, nearly three-quarters of employers (72%) now offer at least one CDHP. This number has remained relatively steady over the last couple of years. However, the number of employers that are offering only a CDHP plan to employees continues to rise, with 22% planning to implement a total replacement CDHP plan next year, up from19% this year.

The survey asked employers about a variety of initiatives they use to manage the health of their employees. More than four in ten respondents (44%) currently have an on-site clinic in at least one of their locations, with 9% expecting to build a clinic next year. 

Employers cover a variety of services/ medications for the treatment of obesity and severe obesity. Nearly two-thirds of respondents (66%) will cover surgical interventions for the treatment of severe obesity in 2014. Additional treatments covered by some employers include FDA-approved medications (36%) and intensive, multi-component behavioral interventions for plan participants with a BMI of more than 30.

Respondents were also asked about common wellness programs. Nearly all employers offer a tobacco cessation program (89%), and 77% offer telephonic or on-site health coaching. More than half of respondents (55%) also make on-site weight management programs available to employees. The vast majority also conduct health assessments (88%) or biometric screenings (83%).

"Employers continue to implement numerous tactics to control costs, improve employee health and productivity and ensure the delivery of high quality health care to their employees and dependents. Some employers are taking creative approaches in their efforts to win the war on rising health costs. These include managing specialty and non-specialty pharmaceuticals, contracting directly with providers who have been shown to provide high quality health care as well as offer employees numerous programs designed to help them live a healthy life," concluded Darling.

About the National Business Group on Health
The National Business Group on Health is the nation's only non-profit organization devoted exclusively to representing large employers' perspective on national health policy issues and providing practical solutions to its members' most important health care problems. The Business Group helps drive today's health agenda while promoting ideas for controlling health care costs, improving patient safety and quality of care and sharing best practices in health benefits management with senior benefits, HR professionals, and medical directors from leading corporations. Business Group members, which include 66 Fortune 100 companies, provide health coverage for more than 50 million U.S. workers, retirees and their families. For more information, visit www.businessgrouphealth.org.

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