CURRENT PRACTICES & TRENDS IN HEALTH PLAN MANAGEMENT. June 12, 2014

Transcription

1 CURRENT PRACTICES & TRENDS IN HEALTH PLAN MANAGEMENT June 12, 2014

2 Today s Presenters Tara Arndt Director, Employee Benefits Sally Prather MMA National Employee Benefits Business Leader Mercer s National Survey of Employer-Sponsored Health Plans

3 About the survey Now in its 27 th year, the survey was established in 1986 A national probability sample has been used since This means that survey results are representative of all employer health plan sponsors in the US with 10 or more employees 2,809 employers participated in 2012 In this presentation, we refer to: - small employers employees - mid-sized / large employers 500-4,999 employees - very large employers 5,000+ employees Mercer s National Survey of Employer-Sponsored Health Plans 2

4 Top Stories Mercer s National Survey of Employer-Sponsored Health Plans

5 Health benefit cost grew 2.1% in 2013 a 16-year low Employers warn of a rebound in 2014 Most employers say health reform will increase their spending in 2014 Many take action to counter ACA cost challenges CDHP enrollment continues to grow, matching enrollment in HMOs Employers use CDHPs to meet cost, choice and compliance goals Widespread interest in private exchanges as a way to add choice While controlling cost and simplifying administration Health management programs stress innovation and engagement Most employers that measure ROI see lower trends Employers remain committed to sponsoring health benefits Sustainable health programs will require workforce planning, proven strategies Mercer s National Survey of Employer-Sponsored Health Plans 4

6 Cost Cost growth slowed again in 2013, with higher increases expected this year Average total health benefit cost per employee rose just 2.1% in % 18.0% 16.0% 14.0% 17.1% Workers' earnings Annual change in total health benefit cost per employee Overall inflation 14.7% 12.0% 12.1% 11.2% 10.0% 10.1% 10.1% 8.0% 6.0% 8.0% 6.1% 8.1% 7.3% 7.5% 6.1% 6.1% 6.1% 6.3% 6.9% 6.1% 5.5% 4.1% 5.2%* 4.0% 2.0% 2.1% 2.5% 2.1% 0.0% -2.0% -1.1% 0.2% *Projected Source: Mercer s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) ; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) Mercer s National Survey of Employer-Sponsored Health Plans June 16, 2014

7 Cost Underlying cost trend still high at 8%, but employers plan to hold the average increase in per-employee cost to about 5% Estimated cost increase to renew plans with no changes vs. actual increase after plan changes Expected trend before plan changes Trend measured after plan changes Higher enrollment will mean additional spending for some employers in % 5.5% 9.1% 6.9% 9.8% 6.1% 8.2% 7.4% 8.0% 5.2%* 4.1% 2.1% * Projected Mercer s National Survey of Employer-Sponsored Health Plans 6

8 Cost Cost shifting has been considerable Average PPO deductible for individual, in-network coverage Employers with employees Large employers In the last 3 years, deductibles have risen about 20% $1,191 $1,295 $1,464 $886 $931 $1,044 $501 $511 $565 $587 $666 $ Mercer s National Survey of Employer-Sponsored Health Plans 7

9 Cost The typical employer plan still meets the ACA s plan value requirement of 60% of covered expenses with room for further cost shifting Employers with employees Median cost sharing* amounts for: 60% plan PPO HMO HSA-eligible CDHP Deductible $2,000 $1000 $2000 $2,500 Hospital coinsurance/copay 50% 20% $250 Data not available Out-of-pocket maximum $6,000 $3,000 Not available $4,000 * Cost sharing for individual, in-network coverage Mercer s National Survey of Employer-Sponsored Health Plans 8

10 Employers success in bringing cost growth under control will be challenged by health reform Employer actions holding cost down Resetting benefit value consumer-directed health plans greater employee cost-sharing New focus on employee choice More sophisticated health management programs Market innovations creating more efficient health care delivery Individual mandate Expanded eligibility New fees Mandated coverages Conservative pricing by carriers ACA impacts pushing cost up Mercer s National Survey of Employer-Sponsored Health Plans 9

11 ACA Managing growth in enrollment by changing contribution strategies Employers with employees Employers with 500 or more employees 13% 18% 12% 10% 16% 18% Raise employee contribution percentage for dependent coverage Raise employee contribution percentage for employee-only coverage Other change Mercer s National Survey of Employer-Sponsored Health Plans 10

12 ACA Employers taking bolder action to steer spouses to other coverage Special provisions concerning spouses with other coverage available Employers with employees Large employers % 7% 6% 6% 9% 4% 3% 2% Spouses with other coverage are not eligible Spouses with other coverage must pay surcharge Spouses with other coverage are not eligible Spouses with other coverage must pay surcharge Mercer s National Survey of Employer-Sponsored Health Plans

13 ACA But the shared responsibility requirements are just the beginning Majority of large employers in danger of getting hit with excise tax by 2022 Percent of employers that would be subject to the excise tax if they made no changes to their current plan but almost a third said avoiding the tax influenced health plan decisions for 2014 Avoiding the excise tax influenced health plan decisions for % 46% 49% 52% 55% 31% 69% Source: 2011 National Survey of Employer-Sponsored Health Plans Excise tax did not influence 2014 decisions Mercer s National Survey of Employer-Sponsored Health Plans 12

14 ACA Taking steps now to avoid the excise tax in 2018 Large employers For nearly a third of employers 31% concerns over the 2018 excise tax influenced decisions for 2104 Introduced a CDHP or took steps to increase enrollment in an existing CDHP 19% Added or expanded health management programs 12% Dropped a higher-cost health plan 11% Unbundled dental and medical plans 4% Other change(s) 12% Mercer s National Survey of Employer-Sponsored Health Plans

15 CDHPs have become mainstream CDHPs seen as central to meeting the challenges of health reform Provide a low-cost plan to newly eligible employees Encourage employees to use the health care system wisely Avoid the excise tax Mercer s National Survey of Employer-Sponsored Health Plans 14

16 Many employers see CDHPs as central to their response to health reform Larger employers still mostly offer CDHPs as an option but more are planning to offer them alone Percent of employers offering CDHPs Percent of covered employees enrolled in CDHPs 55% 38% 31% 19% 15% 21% Employers with employees Employers with 500-4,999 employees Employers with 5,000 or more employees Mercer s National Survey of Employer-Sponsored Health Plans 15

17 CDHP CDHPs typically pass the 60% test but cost about 20% less than PPO and HMO coverage Medical plan cost per employee $10,196 $10,612 $8,482 PPO HMO HSA-eligible CDHP (Includes employer contributions to HSA accounts) Mercer s National Survey of Employer-Sponsored Health Plans 16

18 CDHP Employers working to build enrollment in CDHPs Large employers HSA-based CDHP enrollment rises over time % choosing CDHP when offered w/other medical plans Expect to offer a CDHP as full replacement 3 years from now 21% 24% 29% 14% 16% 22% employees 500 or more employees 5,000 or more employees Employer HSA funding drives enrollment... % choosing HSA when offered with other medical plans... but extensive communication is also important % choosing HSA when offered with other medical plans 30% 28% 20% 21% Employer HSA contribution of $800+ Employer does not have contribution to HSA When HSA communication is extensive When HSA communication is limited Mercer s National Survey of Employer-Sponsored Health Plans 17

19 Reducing cost by adding choice a win-win approach Under health reform all individuals must have health insurance, so employers face rising enrollment and more diverse needs Choice promotes efficiency by allowing employees to buy only what they need Private exchanges add choice without adding administrative burden Eases transition to sustainable program Mercer s National Survey of Employer-Sponsored Health Plans 18

20 Choice Private health care exchanges poised for rapid growth One-fourth of employers are considering switching to a private exchange within two years, and 45% would consider switching within five years In 2 years In 5 years 45% 42% 25% 22% 24% 20% 12% 10% Considering private exchanges for either actives or retirees Considering for active employees Considering for pre-medicareeligible retirees Considering for Medicare-eligible retirees Mercer s National Survey of Employer-Sponsored Health Plans 19

21 Mercer Marketplace Efficient solutions for employers Funding DC or DB Standard Plan Designs Employee Communications and Education Online Call Center Print and Administration Eligibility determination Data-driven events Election Data Deductions Carriers Payroll Choice among multiple, prescreened plans Enrollment Election Management Contribution calculation Reporting and Premium Data HR Professionals Mercer s National Survey of Employer-Sponsored Health Plans

22 Choice Early results from Mercer Marketplace Employers top three reasons for moving to Mercer Marketplace 63% Simplified administration and compliance 47% Ability to better manage future costs, defined contribution facilitation 41% Achieve immediate cost savings Note: Reflects % of early adopters ranking reason as a significant factor in their decision to move to Mercer Marketplace; for most clients, more than one reason played a significant role. Mercer s National Survey of Employer-Sponsored Health Plans

23 Choice Early results from Mercer Marketplace Most employers providing at least three plan options Number of PPO options offered by Mercer Marketplace client 4% 4% 37% 37% One Two Three Four Five 18% Mercer s National Survey of Employer-Sponsored Health Plans

24 Choice Right-sizing: Reduced number of over-insured Typical range of value in current medical plans: 75% to 85% Mercer Marketplace range of value: to 92% 61% Impact of right-sizing on total cost (estimated): to 5% 2% in year 1, and growing over time Mercer s National Survey of Employer-Sponsored Health Plans

25 Choice Early results from Mercer Marketplace Medical right-sizing in first year 80.4% Average value of medical plans pre-marketplace 71.9% Average value of medical plans post-marketplace $800 Per employee cost reduction from right-sizing Mercer s National Survey of Employer-Sponsored Health Plans

26 Choice More employers using voluntary benefits to maintain employee benefit options as core benefit plans change Large employers Profile of a successful voluntary program Employee-valued products User-friendly platform Multi-faceted enrollment solutions Robust education and communication program Program coordination Why employers offer a voluntary benefits program To maintain employee benefit options as core benefit plans change 42% Accommodate employee requests 58% Offer additional benefits at no cost to the employer 68% Give employees opportunity to fill gaps in employer-paid benefits 72% Help employees take advantage of group purchasing power 74% Mercer s National Survey of Employer-Sponsored Health Plans 25

27 Percent of large employers offering the benefit Choice Expanding employees view of the whole benefit package Meeting diverse needs without driving up employer costs 90% Voluntary Benefits Disability 83% Vision 77% Work / Life Benefits* Fitness center or discounts 64% 60% 30% 0% Accident Whole / universal life Cancer / critical illness 59% 49% 43% Legal consult / referral Financial consult / referral Dep. care resource / referral Elder care resource / referral 41% 38% 32% 31% Long-term care Auto / Homeowners Hospital indemnity Pet 28% 19% 17% 9% Telecommuting / Work from home Adoption assistance On-site / near-site dep. care 25% 22% 11% *Data on work/life benefits (with the exception of fitness centers) is from Mercer s 2012 survey Mercer s National Survey of Employer-Sponsored Health Plans 26

28 Taking health management to a new level Employers are banking on health management to control cost in the long-term. In 2013, employers took steps to: Promote engagement as well as participation Create a supportive work environment Measure results Mercer s National Survey of Employer-Sponsored Health Plans 27

29 Health Health management is now the norm, addressing a full range of needs Percent of employers offering program Small employers Large employers 82% 80% 80% 78% 66% 22% 47% 34% 42% 51% 30% 51% 35% 36% End-of-life case management Case management Disease management Nurse advice line Health advocate Lifestyle management Health assessment REACTIVE Addressing the continuum of health needs PROACTIVE Mercer s National Survey of Employer-Sponsored Health Plans 28

30 Health Financial incentives are becoming the norm in health management programs, and participation rates are rising as a result % 52% 62% 64% More employers are driving engagement through financial incentives, most often cash or contribution reductions Large employers Very large employers 52% Large employers offering incentives Large employers not offering incentives 51% Large employers using incentives report higher participation rates 32% 26% 14% 26% *Average % of identified persons actively engaged in program Health assessment completion rate Lifestyle management program participation rate* Validated biometric screening rate Mercer s National Survey of Employer-Sponsored Health Plans 29

31 Health Engaging employees to improve health habits Group activities and technology-based tools offered employees Large employers Worksite biometric screening event 22% 53% Business unit / location group challenges 24% 45% Onsite weight loss programs (such as Weight Watchers) Web-based portal with activity / incentive tracking 11% 40% 20% 40% Onsite exercise or yoga classes 16% 39% Personal challenges 17% 33% Peer-to-peer support 16% 21% Mobile apps for activity tracking / peer interactions 8% 15% None of these 51% 22% Mercer s National Survey of Employer-Sponsored Health Plans 30

32 Health Continued growth in use of outcomes-based incentives Large employers Offer lower premium contributions to non-tobacco users Provide incentives for achieving or maintaining targets for BP, BMI, cholesterol 15% 17% 18% 20% 9% 10% 12% 6% Mercer s National Survey of Employer-Sponsored Health Plans 31

33 Health Measuring health management ROI can be challenging, but results are encouraging Very large employers Just under two-fifths have formally measured ROI with over 75% reporting a positive impact on medical plan trend Substantial positive impact on medical cost trend 23% No 62% 38% Yes Small positive impact on medical trend 56% No improvement in medical trend was found so far 20% Mercer s National Survey of Employer-Sponsored Health Plans 32

34 Health The largest employers lead the way with innovations that reward high-quality, efficient providers Value-based design Accountable care organizations 10% Surgical centers of excellence 22% 25% 27% High-performance networks 15% 27% Collective purchasing of medical benefits 13% 24% Telemedicine 11% 18% Medical homes 5% 13% Reference-based pricing 10% 12% Large employers Employers with 20,000+ employees 37% 50% Mercer s National Survey of Employer-Sponsored Health Plans 33

35 Health reform has employers rethinking workforce strategies Building a sustainable health program in the post-reform world means looking at workforce issues as well as benefit plan design Should we use more parttimers to limit the number of eligible employees? Does a segmentation strategy make sense? Stay in the game or exit? Mercer s National Survey of Employer-Sponsored Health Plans 34

36 Requirement to extend coverage to all employees working 30 or more hours per week will hit some industries harder than others Percent of large employers that currently do not offer coverage in a qualified plan to all employees working an average of 30 or more hours per week 48% 47% 44% 37% 33% 27% 20% Retail / wholesale Transportation / Communication / Utility Government Health care Services Financial services Manufacturing Mercer s National Survey of Employer-Sponsored Health Plans

37 Likely response to ACA s requirement that all employees working 30 or more hours per week be eligible for coverage Based on large employers that do not currently offer coverage to all employees working 30 or more hours per week Make all employees eligible for the full-time employee plans(s) 69% Add a new lower-cost option for all employees 33% Use segmentation strategy: Offer a lower-cost plan to newly eligible employees 10% Pay shared responsibility penalty as necessary 9% Mercer s National Survey of Employer-Sponsored Health Plans 36

38 About one in ten employers will reduce some workers hours to limit the number of newly eligible employees Employers with employees Large employers (500+) 75% 68% 11% 7% 9% 5% 14% 13% Will have fewer employees working 30 hours or more per week Will make some other change in workforce strategy Will make no adjustments Already in compliance (no change needed) Mercer s National Survey of Employer-Sponsored Health Plans 37

39 The larger the employer, the greater the commitment to offering health coverage Percent of employers that say they are very likely or likely to terminate plans within the next five years 34% % 20% 23% 12% 12% 7% 6% Employers with employees Employers with employees Employers with employees Employers with 500 or more employees Mercer s National Survey of Employer-Sponsored Health Plans

40 Towards a sustainable health program: an ACA-compliant core plan, options for those who want them, integrated health management Core low-cost plan design Private health exchange Stay in the game, using proven strategies to manage cost Mercer s National Survey of Employer-Sponsored Health Plans Try something new! 39

41