Keeping health care costs down has long been apressing issue for employers. In 2017, the uncertainty that comeswith the new Trump administration, which seems certain to makenumerous changes to health care policy, is making some businessleaders nervous.

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But even if there are dramatic changes in regulations and taxes,the basic foundations of employer-based health benefits are notlikely to be challenged. And rising costs will still be a problem —which is why it's important employers continue to keep an eye outfor new innovations while continuing to adopt strategies that haveproven effective in containing the rise of health costs.

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HDHPs likely to get a boost from Trump

The movement toward high-deductible health plans (HDHPs) such asHSAs and HRAs continues to be very strong, according to industryexperts. “The top trend going into next year has been consumerdirected health care plans or high-deductible health plans,” saysKevin Davis, senior employee benefits consultant at Univest, afinancial and insurance services company. “We see a lower premiumrate increase [with HDHPs]; about half of what we see ontraditional PPO-type plans. It does seem to be working as acost-containment strategy.”

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Even though the trend toward HDHPs is not a new development,it's worth noting that a big push is expected from the Trumpadministration to promote HSAs and similar models. Trump oftenspoke of HSAs as a key part of his vision for health care coverageduring his campaign.

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Rodney Alvarez, vice president of talent management with Celtraand a spokesperson for the Society of Human Resource Management(SHRM), agrees the adoption of HDHPs has been widespread among allsizes of employers. Even though this model shifts more costs toconsumers, Alverez says the flexibility of HDHPs can allowemployers to help cover some of those costs, while still payingless in premiums.

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“We realized we could save a lot of money if we bought ahigh-deductible plan and simply paid everyone's deductible,” hesays. “It would still be cheaper, and it allows us to provide thesame benefits you would have in a Cadillac plan — but withoutplaying the super-high premiums of those plans.”

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Self-insured model spreading to smalleremployers

Self-insured plans, like HDHPs, are not exactlya new idea. For years, many large employers have found excellentflexibility with the self-insurance route while avoiding some ofthe taxes and regulations that come with fully-insured plans. Onthe other hand, smaller businesses have been less able to take onthe risk of self-insurance.

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But some innovations in recent years have made it much easierfor smaller businesses to self-insure. One of the prime examples is“level funding” for self-insured plans. This approach allowsemployers to pay a regular and predictable (i.e., “level”) fee forinsurance, regardless of claims. The model uses stop-loss insuranceto address unexpected costs, and adjusts the fee yearly—and ifclaims are lower than expected, employers can get a refund.

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Davis says he's seeing increased interest in the level fundingapproach. “It's a newer strategy in the last two years; it's been away for businesses — in some markets as small as 10 employees — totake advantage of true transparency and see their claim exposure,”he says.

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Davis adds that companies with a high rate of claims wouldprobably not be a good fit for level funding. “There is risk,” henotes. “But with every client I've seen make the change, it hasactually reduced both their upfront cost, and their renewal hasbeen lower. For my clients, it has been a win-win.”

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Pharmacy costs — a continuing problem

One area of cost increases that are especially problematic foremployers as well as consumers is the continuing high cost ofdrugs. Headlines about huge increases in the cost of therapies suchas the EpiPen have reflected a general trend of sharp increases indrug costs. The high cost of specialty pharmaceuticals and compounddrugs are often very challenging for employers.

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Businesses and pharmacy benefits managers (PBMs) have pushedback by enacting strategies such as reference-based drug pricing.Reference pricing places limits on what the plan will pay for atherapy, in effect driving providers and patients to less-expensivetherapies. In many cases, there is a wide range of costs for thetherapy, so finding a less expensive alternative is not asdifficult as might be thought.

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Davis agrees that strategies such as reference pricing should beconsidered by employers seeking to hold down costs. “It's anexcellent strategy for larger, self-insured employers,” he says.“You'll end up getting the most cost-effective drug at the lowestprice.”

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Online visits offer cost-containment help

Alvarez and Davis agree that telemedicine is showing greatpromise as another cost-containment strategy. Online medicalappointments via Skype or other platforms not only offerconvenience to employees, they are much less expensive than visitsto a clinic. And many workers seem to like using the online visitapproach, Alvarez notes.

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“Our younger population, our millennials, don't mind doing that— they find it innovative and cool,” he says. “The Skype visitsreduce our costs considerably.”

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Davis also predicts online medical visits will be a significantcost saver for employers. “There's a lot of interest intelemedicine,” he says. “For a self-funded or an HDHP model, it isthe most cost-effective way to get treatment for certain conditionsthat can be handled by [visits on] FaceTime or Skype; conditionssuch as allergies, ear infection, or strep throat.”

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Narrowing networks cut down on costs

Finally, another strategy that health care purchasers arelooking at is narrow provider networks. By limiting health planenrollees to a narrow network of providers, health purchasers cannegotiate lower costs by ensuring their enrollees go to onesystem's providers.

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“In our market, that strategy generally saves an employer about15 percent over a fuller network,” Davis says. “Every year, we seeadditional options of narrow networks. It hasn't had the sametraction of some cost-containment strategies, but that 15 percentsavings definitely grabs an employer's attention, and they do theirdue diligence on looking into whether that's a viablestrategy.”

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Davis' point about traction reflects the fact that somecost-containment strategies can be controversial. HDHP plans shiftmore cost on to enrollees, raising concerns that it mightdiscourage consumers from utilizing health care services even whenneeded. Reference-based drug pricing sometimes meets with pushbackfrom providers who are not happy being told what drugs they canprescribe.

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And similarly, narrow networks limit consumers' access toproviders — patients may have to switch doctors or not see aspecialist they prefer. But studies generally show that health carequality is similar between narrow and broader networks.

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There are arguments on all sides of these issues, and many ofthese debates will take time to resolve. But for now, employersneed to think about their specific workforce and how benefits canbest be structured to balance the needs of workers with the need tohold down rising health care costs.

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