CDHPs now match HMOs in number covered
The good news, says Julio A. Portalatin, president and CEO of Mercer, is that employers have already taken decisive action to slow cost growth so they will be in a better position to handle the challenges ahead. But the impact of the Affordable Care Act on enrollment levels remains a huge question mark.
Health cost slowed again in 2013, according to a Mercer survey, the results of which were announced last week, but HR sources at more than 2,500 different organizations expect that trend to halt or reverse next year, and one of the top ways employers are trying to control costs is by switching populations to consumer-driven health plans.
CDHD enrollment grew from 16% of covered employees last year to 18% in 2013, the same percentage enrolled in HMOs. In certain regions, such as the Midwest, CDHP enrollment is now more than twice HMOs. Mercer reports the average cost of coverage in a CDHP is 17% less per employee than a PPO and 20% less than in an HMO, on average.
Nearly two-thirds of all large employers and one-third of small employers plan to offer a CDHP within three years.
Mercer believes CDHPs will be crucial for employers looking to avoid the 2018 Cadillac tax under the Affordable Care Act. The 40% excise tax hits employers for health coverage that costs more than $10,200 for an individual or $27,500 for a family.
Mercer estimates that approximately a third of employers would currently find themselves at the risk of this tax.
Also still a top employer weapon for controlling cost trend is wellness. Nearly nine out of ten employers who have formally measured the return on investment from their health management programs say theyve had a positive impact. More than half of large employers now incentivize their wellness programs to encourage higher participation, up from 48% in 2012 and 33% in 2011.
Overall, only 6% of those with 500 or more employees think it is likely they will terminate their employee health plans within the next five years because of rising costs. Thirty-one percent of small employers now believe they will terminate their plans, however, up from 22% in 2012.