Growth in the average total health benefit cost per employee slowed from 6.1 percent last year to just 4.1 percent in 2012, the smallest increase since 1997, according to the National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer. Moving more employees into low-cost, consumer-directed health plans and optimizing health management programs were two reasons for the slowed growth, the survey found.
The slight increase amounted to costs averaging at 10,558 per employee in 2012.
Large employers, or those with 500 or more employees, saw higher increases (5.4 percent) and higher average costs, the survey found.
Employers expect another relatively low increase of 5 percent for 2013. However, this increase reflects changes they plan to make to reduce cost; if they make no changes, costs would rise by an average of 7.4 percent, the report stated.
Survey results were culled from responses from public and private organizations with 10 or more employees; 2,809 employers responded in 2012.
Other key findings from the report include the following:
- Just 7 percent of large employers and 22 percent of small employers (those with 10 to 499 employees) intend to terminate their employee health plans within the next five years, even though state-based health insurance exchanges will provide another source of health coverage for individuals beginning in 2014.
- Small employers increased their coverage from 55 percent to 59 percent for the first time in three years.
- Employee enrollment jumped from 13 percent to 16 percent of all covered employees in 2012, with a growing number of employers offering high-deductible, account-based consumer-directed health plans (CDHP) as their primary or only plan.
- Over the past two years, offerings of CDHPs have risen from 17 percent to 22 percent of all employers, and from 23 percent to 36 percent of employers with 500 or more employees. Over half (59 percent) of very large organizations (20,000 or more employees), which typically offer employees a choice of medical plans, now offer a CDHP.
- Employers can save 20 percent per employee by shifting to a CDHP with a health savings account, or spend $7,833 per employee compared to $10,007.
- The average PPO in-network deductible reached $1,427 for an individual in 2012. Although large employers typically require much lower deductibles, the average deductible amount among employers with 500 or more employees rose by about $80 in 2012, to reach $666.
- Nearly half of employers 45 percent say they currently use or are considering using a defined contribution strategy. Employers determine in advance what they will contribute to the cost of coverage, requiring employees to pay anything above that amount. If the employer offers a range of plans, employees can save money by choosing a lower-cost plan.
- Over three-fourths of large employers (78 percent) say that senior leadership is supportive or very supportive of health management programs as a means of encouraging more health-conscious behavior, and more than three-fourths say their programs have had a positive impact on medical plan trend.
- Nearly half (48 percent) of large employers with health management programs provided financial incentives or penalties, up from 33 percent last year. When non-financial incentives (such as recognition, gifts or lotteries) are included, this figure reaches 54 percent.
- Premium reductions were the most common incentives offered by large employers for completing a health assessment in 2012; in addition, a growing number of employers are providing incentives for achieving desired outcomes, instead of (or in addition to) incentives for participating in programs.
With the re-election of President Obama, employers will be focusing on the next generation of cost management strategies. Private exchanges are one option, a private-sector alternative to the state health insurance exchanges. More than half of all employers (56 percent) say they would consider a private exchange for either their active or retired employees.
Other findings include health plan offerings to retirees under age 65 (24 percent), coverage for same-sex domestic partners as eligible dependents: 47 percent, a figure which varies geographically, from 73 percent in the west to 30 percent in the south, and tobacco use surcharges.
Source: Mercer, November 14, 2012
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