The cost of providing employee health care benefits at the largest U.S. employers is projected to increase 7 percent in 2014, according to survey results released Aug. 28, 2013, by the National Business Group on Health (NBGH), a nonprofit association of more than 265 large U.S. companies.
In response, the biggest corporations are continuing their shift to high-deductible consumer-directed plans and making other benefit design changes.
The NBGH's Large Employers’ Health Plan Design Changes Survey, based on responses from 108 of the nation’s largest businesses, was conducted in June 2013—before the Obama administration’s decision to delay for one year the implementation of the employer mandate. Among its key findings:
- The average 7 percent projected rise in health care benefits costs for 2014 is the same increase large employers projected for 2013.
- Some big employers believe that health insurance exchanges could be a viable option for certain populations.
- More companies plan to offer workers a consumer-directed health plan as their only health benefits option in 2014.
Another Cost Viewpoint
Cost projections can vary depending on sample demographics, methodology and other factors. Recently, PricewaterhouseCoopers (PwC) projected that the 2014 medical-cost-increase trend in the large-employer market would be 6.5 percent; it estimated a 7.5 percent jump for 2013. PwC expects the net cost increase for large organizations, after accounting for benefit changes such as higher deductibles, will be about 4.5 percent next year (see the SHRM Onlinearticle "Study: 6.5% Growth in Medical Costs for 2014").
Despite being able to keep cost increases stable for another year, employers continue to embrace changes designed to engage workers in health management and healthy lifestyles, the NBGH found.
“Rising health care costs remain a serious concern for U.S. employers,” NBGH President and CEO Helen Darling said at an Aug. 28 press conference in Washington, D.C. “Employers spent considerable time and energy this year designing health plans that comply with the various provisions of the Affordable Care Act that would have become effective next year. And while the decision to delay provisions related to the employer mandate has provided respite from some of these requirements, the pressure remains on employers to lower costs. Interestingly, many respondents indicated that a portion of their budgeted costs for 2014 was to implement changes mandated by the ACA. With the delay, it is unclear how employer costs will be affected.”
Employee Cost-Sharing Amounts
Large employers were asked: For your most prevalent plan, what are the employee contributions to premium and in-network deductibles in 2013, and what are your expectations for 2014?2013
2014
Employee % of premium
Employee only
20%
20%
Family coverage
23%
24%
In-network deductible
Employee only
$500
$500
Family coverage
$1,000
$1,200
Source: National Business Group on Health
... More Employers Embracing Total Replacement CDHPs
The survey revealed that more than one-third of respondents (36 percent) consider implementing a consumer-directed health plan (CDHP)—with either an employee-owned health savings account (HSA) or an employer-owned health reimbursement arrangement (HRA)—the most effective tactic to control rising costs. (To learn more about these tax-advantaged savings vehicles, see theSHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs.")
The survey found that:
- Nearly three-quarters of employers (72 percent) now offer at least one CDHP. This number has remained relatively steady over the past couple of years.
- The number of businesses that are offering employees only a CDHP continues to rise, with 22 percent planning to implement a total replacement CDHP next year, up from19 percent in 2013.
Consumer-Directed Health Plan Types
Large employers were asked: What types of consumer-directed health plans are you offering in 2013 and 2014?2013
2014
High-deductible health plan (HDHP) with health savings account (HSA)
79%
79%
HDHP with health reimbursement arrangement (HRA)
29%
26%
HDHP with HRA and flexible spending account (FSA)
13%
18%
Other plan type with HRA
13%
8%
Lower-deductible health plan that promotes consumerism
5%
8%
HDHP with FSA
13%
4%
HDHP without a health account
4%
1%
Source: National Business Group on Health
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