By tackling costs themselves rather than passing them along to workers, employers are changing the way they approach the problem of higher prices for employees. (Image: Shutterstock)
A glimmer of light in the overall dark price picture over health care costs: employers are shifting increases away from employees instead of offloading them onto workers.
Employees may not be spending quite so much on health care expenses in 2019 as they would if this were not the case, according to a new actuarial analysis from Aon, which finds that in 2018, although health care premiums rose 3.5 percent, employers only passed along 2.2 percent in premium increases and absorbed “a larger 3.9 percent increase to company costs.” The Aon analysis also found that in 2019, medical and pharmacy plan premiums are expected to go up by 3.5 percent, the same as this year, after plan design changes and vendor negotiations.
“Leading employers are increasingly concerned about the affordability of medical costs and the overall well-being of their employees,” Stephen Caulk, senior vice president and chair of Aon's Trend Committee, is quoted saying. Caulk adds, “Couple that with low unemployment numbers, companies are turning to a variety of strategies to attract and retain talent, including rethinking how they manage health care cost increases. It's no surprise that employers are turning away from shifting costs to employees to addressing the underlying drivers of cost increases.”
For 2018, the analysis says, employees experienced the lowest level of contribution increase to the cost of their health plans in the last five years. Contributions from employee paychecks and cost at point of service, or at the doctor's office, when combined, total 1.6 percent in 2018. In 2019, unsurprisingly, that's expected to increase slightly.
By tackling costs themselves rather than passing them along to workers, employers are changing the way they approach the problem of higher prices for employees. They're using a range of tactics to do this, including possibly adopting programs aimed at managing chronic conditions—half of employers are considering incorporating such condition-specific programs over the next three to five years.
They're also looking for personalized provider navigation and transparency solutions that can help patients find cost-effective local care that's of high quality, as well as appropriate digital health and telehealth solutions that can answer employee needs.
Center of Excellence strategies are also high on their radar screens, with 29 percent of bosses having already adopted them and another 51 percent considering doing so in the near future.
Integrated delivery models—patient-centered medical homes—are also expected to improve the effectiveness of care delivery, while value-based arrangements to change how employers pay for services are on the rise—20 percent already use them, and 59 percent are considering them.
Last but not least, purchasing coalitions for prescription drugs or direct contracts with providers are also being used to manage vendor costs.
Aon also found that the prescription drug market is shifting to respond to calls for lower costs and higher transparency. Questions about how rebates are used and whether they even benefit consumers are resulting in calls for change. “The combination of high drug prices, high brand inflation, increased rebate value and a pipeline filled with expensive specialty medications is causing pressure to mount for a change in how plan sponsors pay for prescription drugs,” John Malley, senior vice president and pharmacy leader at Aon, is quoted saying.
Malley adds, “The consolidation of healthcare agents through mergers and acquisitions is indicative of a mature market and shifting of the drug purchasing paradigm from unit costs to total cost of care. While we do not expect any immediate shifts in how prescription drugs are paid for today, vertical integration between PBMs and health plans in the longer term, could change the way drugs are managed. The heightened focus should be on efficacy, adherence and overall affordability.”
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Marlene Satter
Marlene Y. Satter has worked in and written about the financial industry for decades.
