Surveys: Employers Expect Health Care Costs To Rise by 4% to 5%

Large employers expect to pay between 4% and 5% more for workers' health benefits in 2015, despite implementing numerous cost-saving measures, according to separate surveys from PricewaterhouseCoopers, the National Business Group on Health and Towers Watson, the Washington Post reports.

The surveys were distributed to thousands of mid-sized and large companies in the US.

According to the Post, the projected cost increase is in line with prior years, but the continued pressure from the Affordable Care Act and steadily increasing health care costs have required businesses to find new ways to curb overall costs. Overall, Towers Watson estimated a 4% increase, PwC a 4.8% increase and NBGH a 5% increase.

Employer Cost-Cutting Measures

The Towers Watson survey found that 81% of employers said they plan to moderately or substantially change their health benefits to reduce costs in anticipation of the ACA's excise tax, which is scheduled to take effect in 2018. According to the survey, about 75% of businesses said that they are concerned they will be subject to the tax.

Separately, a survey from NBGH found that 81% of companies will offer health care plans that include higher deductibles and a yearly health savings account.

Meanwhile, the Towers Watson survey and the NBGH survey found employees' annual out-of-pocket costs increased by more than 40% over the last three years, from $1,890 in 2011 to $2,649 in 2014. Employees' share of overall medical expenses has also increased, from 34.3% in 2011 to more than 37% in 2014, according to the surveys.

Towers Watson also found that while most employers do not plan to shift employees to high deductible plans, about 75% said they plan to add at least one measure designed to incentivize consumers to buy more affordable care, such as pricing tools, claims assistance programs or second-opinion services. Meanwhile, one-third of employers have cut or are considering cutting subsidies for employees' spouses in 2015, while 26% said they are considering enacting a surcharge or eliminating spousal coverage if alternative coverage is available and 37% said they have already implemented or plan to implement such reductions in 2015.

The Towers Watson survey also found that while 99.5% of employers do not plan on shifting employees into public health insurance exchanges, nearly 25% are considering moving them into private exchanges by 2016. Meanwhile, about 33% of employers said that they plan to expand telemedicine options for their employees, while 25% of the companies surveyed by NBGH currently offer narrow network options to employees (Gregg [1], Washington Post, 9/7).

Employers Invest More in Wellness Programs, Survey Finds

In related news, Towers Watson in the same survey also found that 48% of employers plan to offer employees direct cash rewards for improvement on specific health outcomes in 2014, compared with just 14% in 2014, the Washington Post reports.

According to the Post, employers previously used less substantial wellness programs and initiatives, such as a weight loss seminar or gift cards for health care surveys. However, employers interested in curbing health care costs have started to offer cash incentives, thinking that such programs will better motivate employees compared with the "participation-based" programs used previously (Gregg [2], Washington Post, 9/7).