Employee health insurance cost increases are holding steady but still growing faster than wages.


Aug. 18—Health benefit costs for large employers are expected to increase by less than health insurance premiums in other market sectors, but still above the rate of inflation and the rate of growth for employee wages.

The cost of employee healthcare benefits is expected to increase by 6 percent in 2017, just as it has the previous two years, although companies making changes to their plans are looking to keep growth at 5 percent, according to a recent National Business Group on Health (NBGH) survey of 133 large companies with a combined 7.2 million U.S. employees.

Those employees will be looking at higher premium costs along with higher copays and deductibles, but companies are looking to control costs via innovations such as directing employees to designated centers of excellence for certain procedures, working with accountable care organizations (ACOs) to better coordinate care, and promoting wellness through health coaching and other means.

News reports have focused on requests for premium rate increases of well into double digits for individual plans on the government-run health insurance marketplace. A Kaiser Family Foundation study projects an average increase of 9 percent for what is typically consumers’ most common choice in a given region: the second-lowest-cost silver-level plans.

Against that backdrop, an increase of 5 to 6 percent could be viewed positively, but Steve Wojcik, vice president of public policy for NBGH, avoids spinning the findings in that direction.

“The growth trends are considerably lower than the expected premium growth on the exchange, so while that may sound good, it’s still higher than overall economic growth and growth in employees’ wages,” Wojcik said. “They’re going to see growth in cost sharing higher than their wage growth, so that will be a challenge for them, and employers will also have to find a way to pay for that increase.”

The companies surveyed paid about 78 percent of their employees’ health premiums in 2016 and have paid roughly that same percentage for the last five years.

For 2017, 84 percent of the employers surveyed will be offering consumer-directed health plans (CDHPs), with 35 percent offering only a CDHP. The most common of these is a high-deductible plan coupled with a health savings account. Across all plans, the survey found the median in-network deductible was $1,425 for an individual and $2,900 for a family plan in 2016. The median employer contribution to a health savings account was $600.

Rising Drug Costs

Pharmacy costs are expected to increase by 7.3 percent next year, while spending on specialty drugs is expected to go up by 16.8 percent. These drugs, often made from living cells, frequently require administration via injection or infusion and enhanced monitoring for side effects. They are most commonly used to treat arthritis, multiple sclerosis, and cancer.

Efforts that employers are using to control pharmacy costs include charging employees the difference between a brand-name drug and a generic (62 percent of those surveyed) and implementing a closed formulary (50 percent).

The survey found increasing corporate interest in ensuring employee access to cost-effective, high-quality care by promoting the use of ACOs and centers of excellence for procedures such as transplants, bariatric surgery, and orthopedic surgery.

Direct Contracting Studied

Only 3 percent of companies surveyed are directly contracting with an ACO, but Wojcik said “significantly more are looking at it.”

“It’s quite a commitment,” Wojcik said. He explained that the strategy requires a “willing provider,” a concentration of employees in one area, and resources to educate employees on navigating the system.

“Direct contracting is not for the faint of heart,” said Dudley Morris, a senior advisor with BDC Advisors. “But it’s an ongoing trend even though a lot of people have not yet pulled the trigger.”

While large corporations such as Boeing and Intel are engaged in direct contracting, Morris said partnerships with “super ACOs” may become more common among smaller businesses. An example of a super ACO is the Integrated Health Network of Wisconsin, an eight-system consortium that offers access to more than 5,000 physicians at some 500 clinics and 42 hospitals.

“I think the smart guys have a variety of tactics, and they know how to use them,” Morris said. He noted that reducing healthcare costs by one or two percentage points can mean “millions or billions” of dollars in savings for some companies.

The NBGH survey noted that companies are making wider use of telehealth services and onsite health centers, which Dudley called “a significant trend” that is creating new access points to care while reducing worker absenteeism.

Betting on Coaching

Eighty-one percent of companies surveyed are offering workers access to nurse health coaches for lifestyle management and treatment of chronic conditions.

Unless they take on clinical roles, health coaches don’t have be nurses, said Elizabeth Wallish, a senior health promotion specialist for Healthways, a Franklin, Tenn.-based provider of employee well-being and wellness services.

A certified health coach herself, Wallish said health coaches are experts in helping people make behavioral changes that improve their well-being. Wallish and Healthways partner with Anthem to work with employees at the Blue Chip Casino in Michigan City, Ind., one of 22 properties owned by Las Vegas-based Boyd Gaming. Employees and their spouses have telephone access to Healthways coaches based in Chandler, Ariz., Wallish said.

Wallish has led two employee wellness campaigns at Blue Chip this year. The first was “Lose It to Win,” an 11-week program in which the casino awarded cash prizes to the three men and three women on staff who lost the most weight (based on percentage of total body weight) and inches off their waist. The second is “Set a Goal, Meet a Goal,” a summer program where employees can reduce their 2017 insurance premiums depending on how well they improve their score on a wellness questionnaire and by meeting healthcare goals such as reducing their weight or blood pressure.

“I would say that there is a good 50 percent of the people I coach who truly want to be healthy,” Wallish said. “They’re proud of how they’re doing, and they show me their Fitbit or pedometer and say, ‘Look at how many steps I took!’ But others will just say, ‘Yeah, I’m exercising.’”

Even some of the less enthusiastic employees will be motivated to improve their health in order to lower their premium next year, but others will remain uninterested, Wallish said. These individuals have had an unhealthy lifestyle for so long that they don’t understand the benefits of good health, she said, so her job is to teach them why it matters.


Andis Robeznieks is a freelance writer based in Chicago. Follow Andis on Twitter at @AndisRobeznieks.

Publication Date: Thursday, August 18, 2016