Employers that work on a calendar year budget are starting to think about budget planning for 2019. The cost of health insurance is a major concern for employers. Locally, Blue Cross/Blue Shield of Michigan announces 2019 insurance increases in late October or the first part of November. If increases stay below 10%, employers may decide their level of benefits can stay the same another year. Higher than that, and co-pays and deductibles as well as insurance benefit packages get analyzed for necessary cost reductions.
A national study just released by the National Business Group on Health (NBGH) reports employers are projecting a 5% increase for the sixth consecutive year in 2019. This study collected its data from large employers. Smaller employers typically get hit with larger increases. The survey found that the cost of premiums and out-of-pocket costs for employees and family coverage insurance will rise to $14,800 per employee in 2019. The survey also reports that employers will cover about 70% of those costs with employees paying the remaining 30%. ASE’s 2017 Health Care Insurance Benefits Survey reported that large employers in the SE Michigan area paid 80% of premiums leaving only 20% of the premium cost to the employee to cover.
At an annual increase of 5% a year the rising cost of health benefits has exceeded corresponding increases in the overall cost of living as well as worker’s earnings for many years running.
Employers are starting to do more to control health care costs than adjusting the co-pays and deductibles as well as reducing the level of benefits. One approach being implemented by large employers is using their IT to leverage digital solutions. Thirty-five (35%) percent of employers surveyed report implementing “alternative payment and delivery models such as accountable care organizations (ACOs) and high-performance networks (HPNs). Large employers with more buying power are contracting directly with health systems and providers. This approach is expected to reach 11% in 2019. Read more about this approach in this week’s EPTW article, New Approach to Rising Health Care Costs – Cut the Middleman, by Anthony Kaylin.
Virtual care, where medical services are delivered remotely via internet is believed to be a big cost savings strategy. This goes beyond physician consultation to “include digital coaching, condition management, remote monitoring, physical therapy, and cognitive behavioral therapy.”
Brian Marcotte, President & CEO of the NBGH the survey sponsor, stated, “Growth in virtual solutions largely reflect employer frustration with the pace of change in how health care is delivered.”
The same goes for rising costs of prescription drugs. The rebate system that presently predominates the market is seen as inefficient and ineffective in management the cost of prescription drugs.
Additional ASE Resources
Dependent Eligibility Verification – As you begin to budget for 2010, it is wise to conduct a dependent eligibility verification. ASE has partnered with Verifi1, who provides health insurance dependent eligibility verification and life event reviews. They find an average of 3-8% ineligible dependents during the initial verification, and as much as 17% during ongoing verification programs. With an average amount saved per ineligible dependent exceeding $4,000, this can equate to hundreds of thousands of dollars in savings for the employer. For more information contact Michael Burns.
Sources: CCH HR AnswersNow (8/10/2018) report on NBGH Large Employers' 2019 Health Care Strategy and Plan Design Survey; ASE 2017 Healthcare Insurance Benefits Survey (published 8/2017)