Employers anticipate healthcare benefits costs will rise 5% next year

Health insurance benefits form
Employers are increasingly recognizing that traditional cost-control methods like cost-sharing and plan design changes aren’t enough to move the needle, according to the National Business Group on Health. (Getty/michaelquirk)

In 2018, large U.S. employers expect healthcare benefits costs will rise 5% for the fifth consecutive year—and in response, many companies are getting creative with their cost-control efforts.

The average cost of providing health insurance to employees and their dependents is estimated to be $13,482 per employee in 2017, and it's projected to rise to an average of $14,156 in 2018, according to the National Business Group on Health’s annual healthcare strategy and plan design survey. Of that predicted total cost for 2018, employers will cover almost 70%, while employees will be responsible for 30%.

For the second year in a row, employers cited skyrocketing specialty pharmaceutical costs as the biggest driver of increasing costs. To tackle this stubborn problem, the survey respondents are increasingly managing where certain high-cost medications are administered, building outcome-based pricing into their purchasing agreements for specialty drugs, and implementing programs to manage the impact of manufacturer coupons.

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Employers are increasingly recognizing that traditional cost-control methods like cost-sharing and plan design changes aren’t enough to move the needle, said Brian Marcotte, president and CEO of the NBGH. Thus, “they are also ramping up efforts to positively affect the supply side of the healthcare system by pursuing healthcare payment and delivery reform initiatives.”

For example, many are using Centers of Excellence (COEs) to steer employees toward providers who offer superior, cost-effective care for certain procedures like transplants or orthopedic surgery. Many large employers’ COEs are also using bundled payments rather than the traditional-fee-for-service payment structure, the report noted.

Employers are also embracing accountable care organizations, as 21% plan to promote them in 2018 and other 26% are considering offering them in the future. And 40% of employers have incorporated some type of value-based benefit design into their health insurance offerings.

On the delivery side, more than half of employers will offer onsite or near-site health centers in 2018. Ninety-six percent of employers will make telehealth services available in states where it is permitted in 2018, and compared to 2017, nearly double the percentage of employers will offer telehealth for behavioral services.

Marcotte also noted that there was a sizable increase in the number of employers offering decision support, concierge services and tools to help employees navigate the healthcare system.

The NBGH survey comes on the heels of another employee benefits survey from Willis Towers Watson. That survey found that employers are increasingly spending more on healthcare benefits and less on retirement programs—though that reallocation may not necessarily line up with employee preferences and needs.

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