As we approach the end of 2017 many employers will once again be looking at health care costs in anticipation of mitigating health plan premium increases.

Mercer’s National Survey of Employer-Sponsored Health Plans projects health insurance cost per employee will rise 4.3% next year. This increase is after employer adjustments of deductibles and carrier switches. However, Mercer notes that the “projected underlying cost increase” is expected to be 6%. The underlying cost increase is that which would result if employers made no changes to their health benefit plans.

The Mercer study finds that employer strategies intended to “manage medical costs without raising employee out-of-pocket spending include providing care coordination and support for high-cost claimants” and implementing incentives that push employees to better/more qualified provider networks. Employers are also “shifting away from traditional fee-for-service provider reimbursement toward new payment models” that provide better value rather than just the quantity of services.

ASE’s 2017 Healthcare Insurance Benefits Survey released in August found that annual premium increases this year came to 5% for Michigan employers. This too is after employer plan design changes. ASE’s survey reports employers projected a 5% increase to health care benefit costs in 2018. Preferred Provider Organization plans (PPO) are the most widely used health care plan type with 84% of non-union ASE survey participants reporting they have this type of health plan. Most PPO plans still share insurance premium cost – 80% employer paid and 20% employee paid.

ASE’s survey found employers implementing several tactics and strategies to manage health care cost increases. Interestingly 48% of organizations participating report they will be implementing telemedicine services. Focusing on the longer-term solutions to health care costs, 46% will increase employee education around plan features and costs and 31% of participants report they will increase wellness programs.  28% will attack prescription drug increases by making generic prescriptions mandatory.

A recently published Willis Towers Watson survey that looked at health benefit costs from a different angle, found the cost of employer health insurance to be on average 11.5% of pay across all industries.

The ASE 2017 Healthcare Insurance Benefits Survey is available to assist employers with group insurance benefit management.  ASE members can access the survey data via the ASE Dashboard; non-members can contact Kevin Marrs.

Sources: ASE Releases 2017 Healthcare Insurance Benefits Survey Findings. ASE 8/28/2017 Press Release; CCH Mercer survey shows employers face a 4.3% increase in 2018 US health benefit costs; highest since 2011 — SURVEY RESULTS; Employer-provided benefit cost varies sharply by industry, Willis Towers Watson analysis finds — SURVEY RESULTS