Large Employers’ 2012 Health Plan Design Changes

National Business Group on Health
August 18, 2011

Medical Plan Costs

In 2012, 63% of employers will increase the employee percentage contribution to premium costs, and 39% will increase in-network deductibles.

Consumer-Directed Health Care

More employers will be offering a consumer-directed health plan (CDHP) in 2012 than in previous years, with 73% planning to offer at least one CDHP next year. In addition, 17% of employers have or will move to a full replacement CDHP design in 2012. The most common type of CDHP employers will offer next year is a high-deductible health plan (HDHP) with a health savings account (HSA) (75%).

The most common method employers use to load health accounts is by contributing a predetermined amount per participant, with 59% of employers with HSAs doing so, and 84% doing the same for health reimbursement accounts (HRA).

Pharmacy Benefits

To manage pharmacy benefits, most employers use prior authorization (76%). The next most popular techniques are:
• quantity limits (72%)
• step therapy (65%)
• three-tier design (59%)

Retiree Health

Fewer employers offer retiree benefits to current active employees, with 26% covering all current actives and 38% covering a portion of their actives. Very few employers offer retiree health benefits for new hires, with 12% offering coverage to pre-65 retirees and 7% offering post-65 supplemental coverage to new hires.

The top strategies being used to control retiree health care costs are capping company contributions (45%), increasing employee contributions (31%) and eliminating coverage for future retirees (28%).

http://capsules.kaiserhealthnews.org/wp-content/uploads/2011/08/2012-NBGH-Plan-Design-Survey-Report-Embargoed-Edition.pdf

And…

Survey: Employers shift rising health costs to their workers

By Sam Baker
The Hill, August 18, 2011

Businesses are shifting away from co-pays, wherein employees pay a fixed dollar amount for healthcare services and the plan picks up the rest. Instead, they’re charging workers a percentage of the total costs. That can help make consumers more aware of the total cost of the healthcare they use.

“We are clearly seeing a march toward a more aggressive consumerist system,” said Helen Darling, president of the National Business Group on Health.

Darling said Thursday that shifting from co-pays to coinsurance is “a more subtle way to increase what the consumer pays.” She predicted that eventually, only governments and unions will keep offering fixed co-pays.

http://thehill.com/blogs/healthwatch/health-insurance/177361-employers-shifting-healthcare-costs-to-workers

Employers are reducing the transparency of the massive shift of health care costs to their employees by using many different methods that individually do not look too onerous, but cumulatively have a major impact.

Some of the methods of shifting more health care costs to their employees include greater premium contributions, greater use of large deductibles and consumer-directed health plans, greater restrictions on pharmacy benefits, and a sharp reduction or elimination of retiree health benefits. One of the more subtle but important methods is reducing the use of co-payments (a fixed dollar amount for a service or product) and instead using coinsurance (a percentage of the amount charged). The percentages are usually much larger than the co-payments would be.

Most of the businesses surveyed are very large corporations (83 percent have over 10,000 employees). Their corporate executives and their passive shareholders have done very well in the last few decades, being beneficiaries of the upward transfer of wealth in our society. Their employees have not done so well and have experienced greater difficulties in managing their personal finances.

Rising health care costs are a problem for all of us. They are now so great that we need progressive methods of financing health care. Yet shifting costs from the wealthy corporate plutocracy to the employees is a regressive form of financing.

Supposedly employers are still contributing a large share of the premium, but only nominally. Most economists agree that employees pay the employer component of the premium though forgone wage increases, and wages have certainly been flat. Again, this is regressive financing.

In crafting the Affordable Care Act, efforts were made to protect employer-sponsored plans so that they would still be the largest source of health care coverage. Is this wise?

Not only is the financing regressive, it leaves in place the administratively wasteful private health plans that intrude on health care by taking away certain benefits and taking away choices of health care providers. It leaves in place the fragmented financing model of private plans that has been incapable of slowing the rate of growth in costs to a level closer to those of other industrialized nations. Furthermore, it leaves health policy decisions in the hands of corporate executives who are beholden above all to their investors, whereas the employees are mere pawns to be used to create wealth for the investors. Why else would they be using so many means to shift more health care costs to the employees?

Every time I write one of these commentaries, I think that the logic of an improved Medicare for All would make it an imperative. Maybe the problem is that logic would lead to health care justice, and that seems to be unthinkable in the United States.