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Most large employers changing health benefit for 2011

August 23, 2010 By: Nadia Category: HealthCare, Medtipster, Prescription News

www.Medtipster.com Source: Employee Benefit News – By Kathleen Koster – 8.18.2010

According to a new survey by National Business Group on Health, more than half (53%) of large U.S. employers plan to revise their 2011 health care benefit programs in the wake of health care reform legislation and anticipated large benefit cost increases next year.

Also considering the provisions of the Patient Protection and Affordable Care Act, 19% of respondents are scaling back changes they planned to make while an equal number are making no changes.

The remaining respondents were still undecided pending further review of the final regulations.

Among employers who will be making specific changes to their health benefit plans to comply with the new law, 70% said they will remove lifetime dollar limits on overall benefits while 37% said they will make changes to annual or lifetime limits on specific benefits.

Approximately one-fourth will remove annual dollar limits on overall benefits while 13% reported they will remove pre-existing condition exclusions for children.

The survey, based on responses from 72 of the nation’s largest corporations representing more than 3.7 million employees, was conducted in May and June 2010.

“While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government,” says Helen Darling, president of the National Business Group on Health. 

“In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year,” she adds.

Employers estimate their health care benefit costs will jump to an average of 8.9% next year, compared with an average increase of 7% this year. To help curb those increases employers plan to use a wider variety of cost-sharing strategies.

According to the survey, 63% of employers plan to increase the percentage employees contribute to the premium, up from 57% who did so this year, while 46% plan to raise out-of-pocket maximums next year compared with 36% this year.

In order to further mitigate costs, employers are shifting to consumer-directed health plans. In fact, 61% of plan sponsors will offer a CDHP in 2011.

While the most common type of plan employers will offer is a high-deductible plan combined with a health savings account (64%), the survey found a large spike in employers moving to a full replacement plan.

Among employers offering a CDHP, the number moving to a full replacement plan doubled from 10% this year to 20% in 2011.

“Consumer directed health plans are living up to their expectations as a way to help save employers money and put employees in greater control of their health care.  In fact, offering these plans was the most often-cited tactic by employers to control costs.  We fully expect that employer interest in CDHPs, and especially full-replacement plans, will continue to increase in the future,” says Darling.

As the health reform law makes Medicare Part D benefits richer as the “doughnut hole” closes between now and 2020, 5% of employers plan to drop retiree health coverage in 2011 while 60% are considering doing so in the future.

In attempt to cut costs with wellness initiatives, 41% of employers offered premium discounts for completing health assessments while 22% offered premium discounts for participating in tobacco cessation programs.

In addition, one in four (25%) of plan sponsors plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefits while 21% plan to do the same for mail-order pharmacy benefits.

Copies of the survey report can be found at www.businessgrouphealth.org.

Towers Watson Survey: Employer Health Cost Rate Increases to Slow to 6.5% This Year, Medtipster reports.

March 02, 2010 By: Nadia Category: Medtipster

Medtipster Source: Towers Watson (NYSE, NASDAQ: TW), 2/22/2010, www.towerswatson.com and www.businessgrouphealth.org

NEW YORK — The continuing sluggish economy is forcing a growing number of large U.S. employers to take more aggressive measures to control rising health care costs and motivate workers to take charge of improving their own health, according to a survey conducted by Towers Watson, a global professional services company, and the National Business Group on Health (NBGH), a non-profit association of large U.S. employers.

Survey findings

  • 83% of companies have already revamped or expect to revamp their health care strategy within the next two years, up from 59% in 2009.
  • Costs are expected to increase 6.5% this year, down slightly from 7% in 2009.
  • 67% of employers identify employees’ poor health habits as a top challenge to maintaining affordable benefit coverage.

Employee Engagement

  • 58% of employers indicate the biggest obstacle to changing employees’ health-related behavior is the lack of employee engagement.
  • 31% say there is a lack of sufficient financial incentives to encourage participation
  • 30% say there is a lack of an adequate health management program budget.

Employee Incentives and On-site Health Centers

  • 66% plan to offer incentives for employees to complete a health risk appraisal, up from 61% in 2009.
  • 56% of employers now offer health coaches, and
  • 26% now offer onsite health centers.

Vendors Can Do Better

  • 67% of companies feel that vendors fall short with programs designed to change member behavior to drive more efficient use of health care services.
  • 66% identify vendor programs designed to change member behavior related to making healthy lifestyle decisions as not at all or only slightly effective.
  • 57% of employers also consider vendors not at all or only slightly effective at driving care to high-quality providers.

“The downturn has amplified the pressure on companies to find ways to support effective health management programs under budget constraints,” said Ron Fontanetta, senior consultant at Towers Watson. “For employers, the current environment is a clarion call to adjust their health plan strategy, reassess vendor relationships and aggressively address the challenge to encourage workers to become better advocates for their own health.” 

“Even in tight times, employers will continue to encourage healthy behaviors with financial incentives and other initiatives,” said Ted Nussbaum, senior consultant at Towers Watson. “However, there are challenges to changing employee behavior that extend beyond budget constraints and employer-sponsored programs. Inspiring workers to be actively involved in their own health remains an uphill battle for most companies.”

About the National Business Group on Health/Towers Watson Report

The 15th Annual National Business Group on Health/Towers Watson Employer Survey on Purchasing Value in Health Care was conducted from November 2009 through January 2010 with 507 employers of 1,000 or more employees that collectively employ 11.5 million workers. The full report will be available in March.

About Towers Watson

Towers Watson (NYSE, NASDAQ: TW) is a leading global professional services company that helps organizations improve performance through effective people, risk and financial management. The company offers solutions in the areas of employee benefits, talent management, rewards, and risk and capital management. Towers Watson has 14,000 associates around the world.  Visit www.towerswatson.com.

About the National Business Group on Health

The National Business Group on Health is a non-profit membership organization of more than 280 members, including 60 of the Fortune 100. The National Business Group on Health is devoted to providing practical solutions to its employer-members’ most important health care problems and serving as the voice for large employers on national health care issues and public policy. Its members purchase health and disability benefits for over 55 million people. Visit www.businessgrouphealth.org.

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