Employers’ Health Care Costs Rise by Smallest Amount in 15 Years

U.S. employers' health care costs increased by 4.1% in 2012, marking the smallest increase in 15 years, according to a survey released Wednesday by Mercer, Columbus Business First reports (Ghose, Columbus Business First, 11/14).

Possible Reasons for Trend

The survey of about 2,800 public and private companies attributed the trend in part to more companies shifting to high-deductible health plans, which encourage workers to seek less-costly care.

Nearly 60% of very large employers -- more than 20,000 workers -- offer such plans, and the portion of all employers offering such plans rose from 17% in 2011 to 22% in 2012, Mercer found (Hancock, "Capsules," Kaiser Health News, 11/14).

More employers are offering HDHPs -- which have 20% lower costs on average than a preferred provider plan -- as they prepare to expand coverage under the Affordable Care Act, according to Mercer. "Moving even a small number of employees out of a more expensive plan into a [consumer-directed health plan] can result in significant savings for an employer," the survey stated.

Mercer also noted that wellness programs are "employers' top long-term strategy for controlling health spending." The survey found that for the third year in a row, there was a large boost in the use of incentives or penalties to encourage workers to participate in wellness programs. Further, incentives have become "more substantial," such as reductions to employees' premium costs (Viebeck [1], "Healthwatch," The Hill, 11/14).

Some Firms Plan To Cut Coverage, Survey Finds

Meanwhile, 7% of large employers and 22% of small employers are "likely" or "very likely" to stop offering employee health coverage in the next five years, the survey found (Viebeck [2], "Healthwatch," The Hill, 11/14).

Small companies are seen as more likely to drop coverage for their workers, leaving them to find coverage through the health insurance exchanges that launch in 2014 under the Affordable Care Act.

Firms with 500 or more employees are becoming less likely to drop coverage; the 7% likely to drop coverage is down from 9% in 2011 ("Capsules," Kaiser Health News, 11/14).