With an expected 5.5% rise in health care costs in 2015 the same year the Affordable Care Acts employer mandate takes effect employers have high hopes that spending can be reined through increased employee consumerism.
Health care costs for mid-sized and large companies have continued their trend upward, reaching 4.4% after plan design changes were realized, finds Aon Hewitts latest survey. And next year, when companies with 50 or more employees are required to provide health care coverage for those who work at least 30 hours per week, average health care costs per employee will reach $11,304 and out-of-pocket costs will jump to $2,487 up 5.5% from 2014, according to data from Aon plcs talent, retirement and health solutions subsidiary.
But Mike Morrow, senior vice president in Aon Hewitts health and benefits practice, says the rise in health care costs is likely due to recent positives in the U.S. job market not the ACA.
Were largely attributing this to a much stronger economy theres much less unemployment, consumers are feeling a little more confident and they will spend a bit more and thats increasing utilization, he says.
Whether health care costs will continue their upward trend due the ACAs employer mandate is hard to say, Morrow says, while noting that most employers are ready to comply with the mandate.
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Traditional plans to mitigate the effects of the ACAs excise tax, meanwhile, include implementation of high-deductible health plans. HDHPs remain the second most popular plan choice and are the sole health plan option for 15% of the more than 560 large employers within Aon Hewitts data pool, which represent 13 million participants and more than 1,260 health plans.
But employers are backing a new health cost containment attack in gating health benefits in the next three-to-five years. More than 60% of companies plan to offer richer health plan designs such as a PPO option to participants that complete a task, such as partaking in a health risk questionnaire or biometric screening.
Its not all employers, but definitely [some] companies are trying to incent employees by a variety of different methods and one of those weve seen dramatically increase is a richer plan design a plan design with lower cost sharing that gives them a real reason to abide by the different wellness constraints, Morrow says.
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Another plan of attack for benefit decision-makers is to reduce covered subsidies (22%) and adding surcharges for adult dependents (18%) that have available health plans elsewhere. Also, roughly half are planning these moves over the next few years. Big companies like UPS took action on their rising health care costs in last summer when it announced plans to stop providing coverage to a portion of employees spouses who were able to opt into medical coverage through their own employers. Of the more than 33,000 spouses being covered, UPS said that about 15,000 could gain coverage from their own employers.
Theres definitely much more employer scrutiny of who they are covering and who they are not, says Morrow. According to Aon Hewitt, 58% of companies have completed an audit of covered dependents to figure who should maintain coverage going forward.
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Also, pay-for-performance strategies, where companies direct participants to hospitals or physicians for specific procedures and testing, have gained steam. Aon Hewitt points out that this trend will continue, as 56% of employers in Aon Hewitts data will consider the tactic in the next three-to-five years.
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