2013 Open Enrollment Season Foreshadows Significant Structural Changes In 2014 And Beyond

from Spencer’s Benefits Reports: As employees make their open enrollment selections this fall for the 2013 plan year, they are likely to see only minimal plan changes compared with last year. However, with mounting cost pressures, health care reform, the emergence of new network configurations and the rapid development of new health care delivery models, employees can expect significant change in 2014 and beyond, according to Towers Watson.

The 2012 Towers Watson Health Care Changes Ahead survey found that 63 percent of employers expect little or no change to their health benefit plan design or employee premium subsidies for 2013. Yet 2014 promises to be a different story, with 42 percent of employers considering changes to plan options, and 31 percent considering reductions in subsidization of coverage for spouses or dependents. Likewise, the percentages of companies planning to use spousal waivers or surcharges when an employee’s spouse has access to employer-provided coverage elsewhere is expected to increase moderately in 2013, but grow significantly in 2014.

The survey projects a 5.3 percent net increase in total health benefit plan costs after any plan changes are taken into account, increasing the average cost per active employee from $10,925 in 2012 to $11,507 in 2013. Of the 2013 total, employees will pay an average of $2,596, or 22.6 percent, up from $2,436 in 2012.

“2013 is a bridge year to a new, emerging health care landscape,” said Randall Abbott, senior health care consulting leader at Towers Watson. “In response to continued cost escalation, the rapidly changing provider marketplace and the many provisions of health care reform, employers are working to deliver greater value for each dollar spent on health care. This will translate into new plan options, new approaches to care delivery and a marked shift to narrow provider networks. While these changes may not be immediately evident in 2012 and 2013, employees should be on the lookout next year for new health care plan designs that encourage them to make more informed decisions or bear a greater financial burden as a consequence.”

Specifically, employees will see new plans emerging that provide different levels of coverage based on cost or quality, new networks of high-quality providers, and new modes of care delivery such as retail care, telemedicine, and employer-sponsored onsite health coaching. They also can expect more interactive tools for selecting medical providers and services based on price and quality. At the same time, more employers will offer incentives for selection and use of high-performance networks, directly contract with medical providers (e.g., physicians, hospitals) and specialty vendors, and adopt new payment methodologies.

“As we move toward a post-reform environment, employers will sharpen their focus on new solutions to leverage emerging delivery system shifts, new technologies and holding employees more accountable for their personal health decisions. As a result, employees will be given more information, data and choices than ever before,” said Ron Fontanetta, senior health care consulting leader at Towers Watson. “The next few years will mark a major reshaping of how health care is delivered—but to control costs and improve workforce health, both employers and employees must prepare for the changes ahead.”

Other areas where significant change is possible by 2014 include:

Outcome-based initiatives. The use of reward or penalties based on biometric outcomes (e.g., achievement of target BMI, cholesterol level) could skyrocket in the next two years. Currently, 13 percent of employers use such incentives, but 9 percent plan to add them in 2013, and another 52 percent are considering them for 2014 or 2015.

Account-based health plans (ABHPs). Six percent of employers plan to add ABHPs for 2013, and another 19 percent are considering adding them in 2014 or 2015. While 12 percent currently offer an ABHP as their only plan option, this percentage could climb to 46 percent by 2014.

Employer sponsorship of retiree medical plans. Nearly six in 10 (59 percent) employers are somewhat to very likely to discontinue their sponsorship of retiree medical plans for post-65 retirees in 2014 or 2015. Instead, many employers will direct retirees to private Medicare exchanges.

For more information, visit http://www.towerswatson.com.

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