Listening to the nation's largest employers share their anxieties and strategies over the rising cost of healthcare at the National Business Group on Health conference would be a sobering experience for any healthcare consumer. By the next decade, many of us are going to be enrolled in health plans that demand us to carefully scrutinize every decision we make and each dollar we spend. More of us will be responsible for up to $6,000 in out-of-pocket costs before real coverage kicks in.
The nation's largest employers are leading the trend toward consumerism, relying increasingly on employees to share more of the costs and manage expenses at a time when household budgets and family to-do lists are stretched to the limit. Fortunately, corporate benefit directors have been gearing up to guide employees through the process of being smarter consumers of healthcare while also helping them to stay as healthy as possible.
Conference-goers at Business Health Agenda 2014 in Washington, D.C. shared best practices to confront the tough choices ahead. For some, that means moving to full-replacement consumer-driven plans.
I'm scared, a human resources official admitted. It's going to be very difficult on our employee population and I need to win them over.
To set the context, Towers Watson, a consulting firm that partners with NBGH in an annual survey, reported that nearly all 595 large U.S. employers (NBGH represents primarily the Fortune 500) plan to continue offering health benefits to full-time employees. The sobering part is that 92 percent expect to make moderate to significant changes in employee health benefits by 2018.
Even though the healthcare spending trend has been held to a low 4 percent the past year, employers are seeing their healthcare costs continue to outpace inflation. To compound the problem, companies that offer rich benefits face a 40 percent excise tax starting in 2018 for annual premiums that exceed $10,200 for individuals and $27,500 for family coverage.
The so-called Cadillac Tax provision of the Affordable Care Act has lit a fire under employers to plan for the long term instead of just one benefit year to the next.
O-M-G! exclaimed another HR official, describing her reaction when learning the tax would cost her firm $480 million. She added, In one misstep, one piece of strategy we don't get right, and get hit with a large tax, I'm toast.
Employers are strategizing ways to lower benefits and limit their financial exposure. Many firms, according to Towers Watson, are reducing contributions for dependents and spouses. Others are moving retirees from group plans into Medicare exchanges, while fewer (but a growing number of) employers are moving active employees into private exchanges with defined contribution plans.
In addition, 33 percent of large employers plan to institute reference-based pricing, meaning they are setting a fixed budget of what they will pay for certain medical procedures and requiring members who want more expensive services to pay the difference. This strategy helped control costs for knee and hip surgeries for members of the California Public Employees Retirement System in a program overseen by Anthem Blue Cross.
The looming excise tax is contributing to an acceleration of consumer-driven health plans. Towers Watson reports that nearly three-quarters of large employers offer account-based health plans in 2014, with another 9 percent expecting to add one for the first time in 2015.
About 18 percent of companies have instituted CDHP as the only option in their workplaces. Among the companies that have moved or plan to move to full CDHP replacement are Delta Airlines, Lockheed Martin, Pacific Life Insurance Co. and Whole Foods.
However, these and other large companies in the CDHP space are not just leaving employees to fend for themselves. They are making wholesale changes in their approach to population health management and member engagement.
Companies are increasingly using predictive modeling to understand in detail the health risks of varying demographic groups within their population and customize programs to meet their needs. They are instituting more wellness programs and financial incentives to encourage preventive care, as well as providing health coaching and nurse case management to treat those with chronic diseases.
But one of the most persistent themes throughout the conference was the need to engage employees by providing information and assistance when they need it and in a format that is visually appealing and even speaks to the gamer in them.
In the workplace of the future, employees will have access to a one-stop member web portal with graphically rich, simple, easy-to-find information and links to procedure price comparisons, low-cost network providers, incentive programs, and other health resources.
Companies will reach out to employees and their families with individually tailored messages addressing their specific health status, pointing them to resources to keep abreast of their conditions and change their behaviors. Interaction will take various forms: from computers to mobile devices to social networking sites. Mobile apps will transmit results of biometric and other health readings to providers.
We can only hope that this new approach to consumerism will find its way beyond the largest corporations and into smaller workplaces that are moving increasingly to CDHPs. Yes, we should all be shopping smarter as consumers, but we need the tools to do so.
Follow Chris Lewis on Twitter @ChrisLewisDRG