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Large Employers Revamping Health Benefit Programs for 2


imagesTo assess the impact of the PPACA on its employer members, the National Business Group on Health (NBGH) conducted a survey which shows that large employers are making big changes to employee benefits for 2012.

With the cost of employee health care benefits expected to increase next year at more than twice the rate of inflation, large U.S. employers are planning to have workers share more of the cost next year, the NGBH survey found.

The survey also found that more employers are adopting consumer-directed health plans such as high deductible plans coupled with health savings accounts. Those businesses are also making other changes to their benefit programs as various components of the health care reform law take effect.

The NBGH survey found that employers estimate their health care benefit costs will increase an average of 7.2% in 2012. That is slightly lower than this year’s 7.4% average increase, but it is on a higher base and it still sharply outpaces the economy’s anemic growth and business conditions in this weak recovery. To help control those increases and begin driving down costs to avoid the Cadillac tax, employers are planning to use a wider variety of cost-sharing strategies.

Employers indicated those changes would include:

  • More than half of respondents (53%) plan to increase the percentage that employees contribute to the premiums.
  • 39% plan to increase in-network deductibles.
  • About one in four employers plans to increase out-of-network deductibles (23%), and
  • out-of-pocket maximums (22%) next year.

Employers are facing a multitude of challenges posed by rising health care costs, the weak economy and the financial and administrative impact of complying with the new health reform law, said Helen Darling, President and CEO of the National Business Group on Health. As a result, employers are being much more aggressive in their use of cost-sharing techniques and cost control programs, and are making certain that employees have more reasons to be cost-sensitive health care consumers.

Indeed, according to the survey, nearly three in four employers (73%) will offer employees at least one consumer-directed health plan (CDHP) in 2012, a sharp increase from 61% that offer a plan this year. In addition, about two in ten employers (17%) will have or move to a total replacement consumer-directed health plan in 2012. The most common type of CDHP plan is a high-deductible health plan with a health savings account (75%).

The NGBH survey also found that more than half (57%) provide employees’ spouses and domestic partners access to telephonic or online weight management coaches while 54% provide access to online weight management tools. Approximately one-third of employees also make these programs available to employees’ children.

Changes as a Result of Health Care Reform

Respondents were asked what changes they made or are planning to make as regulations from the Patient Protection and Affordable Care Act continue to come into effect. The survey found the following:

  • Annual Benefit Limits: The majority of employers (59%) are not making any changes for 2012, (full restrictions on benefit limits will be banned in 2014). However, more than one-fourth (27%) are making changes to annual limits for preventive and wellness services. Another 14% are making changes to annual limits for mental health and substance abuse services.
  • Grandfather Status: Nearly one fourth (23%) will have at least one benefit option that keeps its grandfather status in 2012 while 19% will drop its grandfather status. About one half (49%) did not have any benefit option in grandfather status this year.
  • Default Plan for New Hires: More than one fourth (27%) plan to use their least costly health plan for employees as their default plan for new full-time hires as required. Slightly fewer (19%) plan to use the least costly plan for employers as the default plan.

Employers are making these changes as they understand that affordability is tied to employees’ premium costs and household incomes so they have two strong arguments for aggressively driving down costs — both theirs and employees. By ading greater employee rersponsibility in health care financing, employers are hoping they will more efficiently utilize the health care system.

That said, all payers of health care have to pitch in and create greater incentives fo health care efficiency on all sides of the equation. That includes providers practicing efficient, non-defensive care, consumers making appreopriate choices in appropriate health care settings and employers making quality benefit choices and sharing with employees in the cost of care.

Health plans and government purchaser (Medicare, Medicaid, and TRICARE) must also be sure to pay appropriate levels for appropriate care asnd provide incentives for efficient care wherever and whenever possible.

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