National Business Group on Health, August 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 365 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.
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 to employees continues to rise, with 22% planning to implement a total replacement CDHP next year, up from 19% this year.
(The National Business Group on Health members are primarily Fortune 500 companies and large public sector employers — including the nation’s most innovative health care purchasers — who provide health coverage for more than 55 million U.S. workers, retirees, and their families.)
By Don McCanne, M.D.
The National Business Group on Health survey is important because it represents the views of the nation’s largest employers who provide coverage for over 55 million workers and their families – supposedly the best health benefit programs available. Three findings in this survey should have us concerned.
1) The costs of providing health care benefits have increased at the rate of 7 percent for each of the past three years, considerably higher than the rate of inflation. This indicates that health care costs continue to increase at unsustainable rates, regardless of the implementation of several programs supposedly designed to slow spending increases.
2) Although large employers cannot use the state health exchanges until 2017, interest in both private exchanges and state exchanges is increasing. A major attraction of the exchanges is that employees are most likely to select plans with actuarial values of only 60 to 70 percent because of their lower premiums. This offers employers the opportunity to shift from defined health benefits to defined contributions for the exchange plans. This shifts more of the health care costs to employees.
3) About three-fourths of employers now offer consumer-directed health plans (CDHPs), and next year 22 percent will offer CDHPs as the only option. CDHPs are high deductible plans that shift more costs to employees and their families. Some may be associated with a health spending account, but that is little more than a tax gimmick that favors higher income employees. Whether these accounts are funded by direct employee contributions or by employer contributions representing forgone wage increases makes little difference as far as whether or not health care is more affordable. It is ultimately the employee that is responsible for the increases in out-of-pocket costs.
The National Business Group on Health represents two-thirds of the Fortune 100 companies – the biggest of the biggest. They should be offering the very best. But instead, these trends should make us want to accelerate our movement away from employer control of individual health plans and toward enactment of a single, publicly-financed national health program that would include everyone and treat all of us fairly. The tycoons seem to be losing interest in the welfare of their employees, so what chance would the rest of us have without converting to an improved Medicare that covered everyone?