Thanks to three recent studies, a clearer picture is forming as to what trends employers are following to curb the cost of health benefits.
High-deductible plans on the rise
In their 2014 Touchstone Survey, Price Waterhouse Cooper reports that 85 percent of employers questioned have implemented, or are considering, an increase in employee cost sharing over the next three years. And nearly one in five employers now offer a high-deductible health plan as the only insurance option for their employees.
In fact, the survey shows that while PPO plans are still the predominant plan offering, enrollment in these plans has actually decreased by 16 percent from 2009 to 2014. Contrast that with the fact that enrollment in high-deductible plans have tripled in the same time frame, growing by 225 percent.
Source: PwC 2014 Touchstone Survey. Enrollment percentages represent percentage of employers surveyed that had plan with the highest enrollment.
Higher deductible plans come with corresponding lower premium costs. The reason for this is twofold. One, employees bear a larger portion of the initial health care cost for the year until their deductible is met. And two, with a higher deductible, some employees become reluctant to avail themselves of health care services leading to lower utilization. (In this latter case, employers have to weigh the benefits of the higher-deductible plan with the possibility of employees becoming more ill as they forego early care.)
This trend is also supported by research done by the Healthcare Trends Institute, which also reports that companies are looking to higher deductible, lower premium health care plans. This approach is gaining more consideration as organizations approach the 2018 Cadillac Tax and upcoming employer mandate.
Private exchanges gaining traction
The Price Waterhouse survey further notes that more companies are considering private exchanges as a way to provide health care to their employees. Exchanges offer a number of different coverage options to workers and take on the management of the accounts so employers no longer have to. With a defined contribution, employees can choose plan or a number of different benefit options on a private exchange.
Towers Watson notes a similar finding in their employee study released in March 2015. Confidence in private exchanges is increasing: 17 percent of employers view them as a viable alternative for active, full-time workers. And that number doubles to 37 percent by 2018. More than one-quarter of employers have extensively analyzed private exchanges, and one in five say they are more interested in adopting an exchange today versus a year ago. Primary reasons for this interest include cost savings and administrative simplicity.
Health care companies react
Health care companies are anticipating this shift in employer preference. Kaiser Permanente (formerly Group Health) has 20 health plans—including HMO and Access PPO provider networks, as well as HSA plans—available for large group employers on the Bright Choices private exchange platform from Liazon. These plans feature deductibles ranging from a low of $250 to as high as $5,000. You can expect to find us on additional private exchanges in the future.