Higher Health Care Costs For Employees And More Private Exchanges Are Expected Trends For Near Future

Employees can expect to continue to pay more for their health plans, and to face higher deductibles and copayments, according to a recent survey by Wells Fargo Insurance of more than 70 insurance companies. Employers also can expect to pay higher rates for their employees’ health care based on a finding in the survey that overall claim costs will continue to increase in the upper single digits in 2015.

Wells Fargo also found that more employers are exploring private exchanges and defined contribution strategies. In fact, 47 percent of survey participants reported that they would launch their own proprietary exchange by 2015.

“We’re finding that employers are considering private exchanges and defined contribution strategies to manage rising costs,” said Nick Allen, national practice leader for actuarial services with Wells Fargo Insurance. “Defined contributions strategies are often just shifting cost to employees, and private exchanges are an option, but may do little to change health care utilization behaviors. Product innovation and consumer engagement remain critical in creating a culture of smarter health care spending.”

Wells Fargo appeared to link the expected hike in claim costs to ongoing implementation of the Patient Protection and Affordable Care Act (ACA), stating in a news release that, “In addition to health care reform provisions,” claim costs can be affected by such things as population age, price inflation or deflation, changes in provider treatment patterns, and improvements in technology and drug therapies.

Wells Fargo looked at claim activity over a six-month period, and projected the following increases in the national average cost of claims:

• Health maintenance organizations (HMOs)—7.5 percent;
• Point-of-sale (POS)—7.7 percent;
• Preferred provider organizations (PPOs)—8.3 percent;
• Consumer driven health plans—8.6 percent;
• Exclusive provider organizations (EPO)—8.9 percent;
• Indemnity plans—9.5 percent; and
• Prescription plans—8.6 percent.

The top three employer product innovations in 2014 were, according to the survey, accountable care organizations (ACOs), increased wellness programs, and narrow provider network offerings.

For more information, visit https://www.wellsfargo.com/press/2014/20140429_survey-cost-of-healthcare-claims.

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