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 Large Employers Find No End to Rising Costs for Providing Health Care Benefits

Large employers expect to pay around 5 percent more in 2019 to provide employee health care benefits, bringing the total cost per worker to just under $15,000 next year. This cost rise continues a trend that shows no signs of abating despite moves by business to try new ways of delivering and modeling such benefits, according to the latest survey by the National Business Group on Health (NBGH) released Aug. 7.

The Large Employers’ 2019 Health Care Strategy and Plan Design Survey by NBGH said including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $14,099 per employee this year, and projected to rise to an average of $14,800 in 2019. 

Of those totals, employers said they would cover around 70 percent of those costs, and employees about 30 percent. The main reasons cited by employers for the year-to-year cost increases were high-cost claims, specialty pharmacy, and specific diseases.

Brian Marcotte, president and chief executive officer of NBGH, said health care costs continue to outpace workers’ earnings and increases in inflation, making the trend unaffordable and unsustainable. This means employers will no longer be able to rely on traditional cost-sharing techniques to manage costs, spurring a growing number of employers to take an activist role in “shaking up how care is delivered and paid for.” 

This point was made clear in the survey where nearly half of respondents (49 percent) said they are either driving changes in the delivery system directly or through their health plan, leveraging digital solutions, or both. “For example, 35 percent are implementing alternative payment and delivery models such as Accountable Care Organizations (ACOs) and high-performance networks (HPNs) either directly or through their health plan,” he said.

As for new technology’s role in reducing costs, more than half of employers (52 percent) believe virtual care will play a significant role in how health care is delivered in the future, while 43 percent believe artificial intelligence will play a major role.

“In fact, half of employers (51 percent) identified implementing more virtual care solutions as their top health care initiative in 2019. Virtual care has branched out well beyond physician consultations to include digital coaching, condition management, remote monitoring, physical therapy, and cognitive behavioral therapy, all of which show the greatest potential for growth over the next several years,” the survey said.

On the issues of prescription drug costs, a prime concern for years throughout the health care system, the NBGH survey found nearly all employers believe the pharmaceutical supply chain needs to change, with 14 percent saying it needs to be more transparent, and half said the pharmaceutical supply chain is inefficient and too complex and needs to be overhauled and simplified. 

Additionally, three in four employers do not believe drug manufacturer rebates are an effective tool for helping to drive down pharmaceutical costs, and over 90 percent would welcome an alternative to the rebate-driven approach to managing drug costs.

According to the survey, more than half of respondents are concerned that rebates do not benefit consumers at the point of sale. A growing number of companies (27 percent) are adopting recently developed capability by pharmacy benefit managers to pull rebates forward at the point of sale to benefit consumers. And, another 31 percent are considering implementing point-of-sale rebates in the next few years. 

On another subject of concern for large employers, NBGH said 55 percent of those responding are very concerned over the impact of prescription opioid abuse on the workforce and are working with their benefits partners to implement multiple strategies to change prescribing patterns and increasing access to alternative therapies.

The Large Employers’ 2019 Health Care Strategy and Plan Design Survey was conducted between May and June 2018. A total of 170 large employers participated. In total, respondents represent a wide range of industry sectors and offer coverage to more than 19 million employees and their dependents. 

See more on the survey at www.nbgh.org.

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