Employers expect health care costs to rise by 5.5 percent in 2018, up from 4.6 percent in 2017

Employers expect health care costs to increase by 5.5 percent in 2018, up from a 4.6 percent increase in 2017, according to the 22nd annual Best Practices in Health Care Employer Survey by Willis Towers Watson. In the face of these continued cost pressures, including employee affordability, employers plan to step up cost management strategies over the next three years, including evaluation of emerging health care delivery solutions and improved patient navigation and health engagement.
The survey also showed that despite uncertainty about the future of health care legislation, employer confidence in offering employee health care benefits has reached its highest level since the passage of the Affordable Care Act in 2010. Ninety-two percent of employers said they are “very confident” their organization will continue to sponsor health benefits in five years.
“Cost management of health benefit programs remains the top priority for employers in 2017 and 2018,” said Julie Stone, a national health care practice leader at Willis Towers Watson. “While employers made significant progress over the last few years refining their subsidy and vendor/carrier strategies, many are now looking to other aspects of their health benefit programs in order to improve health and dampen future cost increases. Over the next three years, they will seek to improve patient engagement, expand the use of analytics, and efficiently manage pharmacy costs and utilization. Yet, with rising concerns about affordability, employers are challenged to keep costs low without overburdening employees financially.”
Employers are pursuing a wider array of approaches to reduce health care cost and risk – both through improved program efficiencies and members’ health engagement. These areas of focus will include encouraging patients to use preferred providers for health care delivery, e.g., telemedicine, centers of excellence, and high-performance networks; emphasizing better outcomes and cost savings in high-priority clinical conditions, such as diabetes, musculoskeletal health and mental health; and selecting partners based on their ability to achieve demonstrably improved outcomes, as well as hold the line on cost.
Employers also aim to enhance employee engagement by increasing choice of benefit plans, improving decision support, and offering health wearables and mobile apps.
Other key employer priorities over the next three years include:

1. Encouraging employees to use preferred health care delivery options:

  • Telemedicine for office visits: 78 percent of employers currently use these consultations with another 16 percent planning to or considering to by 2019.
  • Centers of excellence within health plans: 44 percent of employers currently use these centers with another 33 percent planning to or considering to by 2019.
  • High-performance networks: 15 percent of employers currently use such networks with another 36 percent planning to or considering to by 2019.

2. Selecting carriers and vendors based on:

  • Competitiveness of negotiated provider discounts: 94 percent;
  • Competitiveness of vendor’s network access: 94 percent; and
  • Competitiveness of vendor’s total cost of care: 92 percent.

3. Curbing pharmacy costs and utilization:

  • Evaluate pharmacy benefit contract terms: 62 percent of employers are currently evaluating contract terms with another 32 percent planning to or considering to by 2019.
  • Adopt new coverage or utilization restrictions as part of specialty pharmacy strategy: 60 percent of employers recently adopted these restrictions with another 24 percent planning to or considering to by 2019.
  • Address specialty drug costs and utilization performance through medical benefits: 44 percent of employers currently do this with another 38 percent planning to or considering to by 2019.

4. Elevating employee health engagement through expanded choice and a more personalized experience:

  • Add choice in benefit types by offering voluntary benefits: 66 percent of employers currently use this tactic with another 20 percent planning to or considering to by 2019.
  • Create a virtual shopping experience at the time of enrollment: 24 percent of employers currently do this with another 26 percent planning to or considering to by 2019.
  • Provide decision-support tools for health navigation: 55 percent of employers currently offer such tools with another 26 percent considering to for 2019.
  • Encourage the use of mobile apps for condition management or health risk reduction: 19 percent of employers currently provide this to their employees with another 28 percent planning to or considering to by 2019.
  • Promote wearable devices for tracking physical activity: 26 percent of employers currently promote these to their employees with another 18 percent planning to or considering to by 2019.

“Employers understand that there is no single strategy for success when it comes to health care, and it is critical to engage employees through education and communication that will create a win/win,” said Catherine O’Neill, a senior health care consultant at Willis Towers Watson. “The most effective health programs will include a broad range of strategies that encompass employee and dependent participation, program design and subsidy levels, and plan efficiency. The ultimate goal is to offer a high-value plan that manages costs for both employers and employees while also improving health outcomes.”
SOURCE: Willis Towers Watson.

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