Large Employers Holding Health Costs Steady

Despite skyrocketing specialty pharmacy costs, overall health care benefit cost increases at large U.S. employers are expected to hold steady at 6% again in 2017, according to an annual survey by the National Business Group on Health (NBGH).

According to the “Large Employers’ 2017 Health Plan Design Survey,” the 6% increase employers project for 2017 is identical to the increase they would have experienced in each of the past two years had they not made changes to their plan design. However, many employers expect to hold increases to 5% by making some changes to their plans.

Fueling the overall growth in the cost of health benefits is the surge in spending on pharmaceuticals, and specialty drugs, in particular. For the first time in the survey, most employers now consider specialty pharmacy the highest driver of health costs and are taking steps to curb them. According to the survey, nearly one-third of respondents (31%) indicated specialty pharmacy was the highest driver of health costs.  That compares with only 6% who cited specialty pharmacy as the number one driver in 2014. Overall, 80% of employers placed specialty pharmacy as one of the top three highest cost drivers, followed by high cost claimants (73%) and specific diseases and conditions (61%).

This year’s open enrollment season will bring no major changes for many employees. Consistent with this year, employees should expect about a 5% increase in premium contributions and minimal changes to their plan design.

NEXT: Optimizing how health care is accessed and delivered

Based on the survey, there are other things employees can expect during open enrollment:

• Telehealth services on the rise: Nine in 10 employers (90%) will make telehealth services available to employees in states where it is allowed next year, a sharp increase from 70% this year. By 2020, virtually all large employer respondents will offer telemedicine. Utilization by employees remains low, but is increasing steadily.
• Consumer-directed health plans (CDHPs) increase slightly: Overall, 84% of employers will offer a CDHP in 2017, up from 83% this year. In addition, more than one-third of employers (35%) will only offer CDHPs to employees in 2017, a slight increase from 33% this year.
• Spousal surcharges levelling off: One in three employers (33%) will have surcharges in place for spouses who can obtain coverage through their own employer, roughly the same as this year. A few employers will exclude spouses when other coverage is available through an employer.
• Expanded options at Centers of Excellence grow: The use of Centers of Excellence will grow from 79% this year to 85% in 2017. The largest increases will be for bariatric surgery (up 15 percentage points), transplants and fertility treatments, both up 8 percentage points.
• Tools to manage care: Eight in 10 respondents (80%) plan to offer nurse coaching for care and condition management, while 72% will offer nurse coaching for lifestyle management. Nearly two-thirds (65%) will provide employees with self-service decision-making tools to help them become better health care consumers.

“Employers’ focus in 2017 is shifting away from plan design to optimizing how health care is accessed and delivered,” says Brian Marcotte, president and CEO of NBGH.

The survey was conducted between May and June 2016. A total of 133 large employers participated in the survey.