Employers View The Health Care System As Wasteful And Underperforming

Employers view the health care system as wasteful and expensive, and their keys for improving the system are increased transparency around pricing and performance, according to Deloitte’s 2013 Survey of Employers. The report also found that, three years into the implementation of the Patient Protection and Affordable Care Act (ACA), many companies still do not fully understand the law’s features.

According to Deloitte, only 33 percent grade the performance of the health care system as an “A” or “B,” while 38 percent rate it a “C” and 29 percent a “D” or “F.” Regarding the ACA, only 22 percent of employers believe that it will reduce costs by 2019, while just 19 percent said it will improve quality of care by that time. About half of respondents said it will widen access to health insurance. When asked what is likely to improve the system, the leading response was “increased transparency around the prices of specific medical products, services and procedures” (52 percent) followed by “clear, accessible information about the performance of care provided by doctors” (46 percent).

Bill Copeland, national managing principal of Deloitte’s life sciences and health-care practice, said employers are frustrated over a perceived lack of value given what they pay into the system, and that they do not believe the ACA is addressing this gap. “Employers feel they lack the data and tools to manage their concerns around cost and quality,” said Copeland. “I think in the coming year, they will join the front lines of the effort to improve the system by demanding more visibility and by strengthening the use of incentives and penalties to motivate employees toward healthful behaviors.”

The survey found that 80 percent of employers said their health care costs have risen over the last three years, estimating 30-percent growth during that period. They estimate passing an average of 26 percent of the cost increase to their workers. In fact, the top strategies used by U.S. companies to manage costs are employee cost-sharing (54 percent), followed by wellness programs (36 percent), plan design changes (28 percent), reducing benefits (20 percent), managing networks (19 percent), limiting worker hours (18 percent), and using defined contribution plans (17 percent).

The survey also found the following:

• Employers on average anticipate that their total health costs will be 19 percent higher in 2014 versus 2013.

• Forty-nine percent share cost and quality information with employees regarding health-care providers, common procedures, and medications.

• Twenty six percent invest in rewards/penalties, technologies and coaching to motivate employees toward healthful behaviors; 39 percent of the companies which do so say they measure their return on investment.

• Employers lack trusted sources to help them make value-based purchasing decisions. Those identified as the most trusted resources include independent consultants (24 percent), physicians (22 percent) and health insurance plans and third-party benefits managers (each 21 percent).

• Twenty three percent analyze their claims data to identify providers that do unnecessary testing or procedures or to see if providers are complying with evidence-based standards. Slightly more than one third use claims data to analyze employee use and costs regarding treatments, medications and other services.

• Employers point to hospital costs (75 percent), prescription drug costs (67 percent), and waste and inefficiency in clinical/administrative/billing processes (67 percent) as the chief drivers of overall health costs. Such factors as insufficient competition in insurance market, insufficient employee awareness and responsibility for costs and new technologies and equipment rated lower.

The survey contains responses from 500 randomly-selected U.S. employers with 50 or more workers offering health benefits during May and June of 2013. For more information, visit http://www.deloitte.com/us.

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