Friday, August 31, 2012

Fwd: qotd: Future of large-employer health benefit programs

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-------- Original Message --------
Subject: qotd: Future of large-employer health benefit programs
Date: Fri, 31 Aug 2012 11:32:03 -0700
From: Don McCanne <>
To: Quote-of-the-Day <>

Towers Watson
17th Annual Towers Watson/National Business Group on Health
Employer Survey on Purchasing Value in Health Care

Performance in an Era of Uncertainty

** Affordability issues are a growing challenge

Trends remain double the rate of inflation. Employees' share of premium
costs increased 9.3% between 2011 and 2012, with the dollar burden
rising from $2,529 to $2,764. In fact, employees contribute nearly 40%
more for health care than they did five years ago, compared with 34% for
employers. Likewise, out-of-pocket expenses increased over the last year
from 16% to 18%. That increase is partly due to subsidy shifts for
dependents, as nearly half of companies increased employee contributions
in tiers with dependent coverage. About a quarter of companies (24%) are
using spousal surcharges, with another 13% planning to do so next year.
• The total employee cost share, including premiums and out-of-pocket
costs, has climbed from 33.2% in 2011 to 34.4% in 2012.
** Employers confirm their commitment to providing health care benefits
for active employees, but long-term confidence declines sharply

Many employers are steadfast in their commitment to their active health
care benefits as a central component of their employee value
proposition. Through 2015, most employers will remain focused on
optimally managing the design and delivery of their programs, with a
select number tailoring their designs to facilitate the availability of
federal subsidies in the Exchanges for a portion of their workforce.
Looking to the end of the coming decade, employers are much less
confident that health care benefits will be offered at their organization.
• Only 3% of employers are somewhat or very likely to discontinue health
care plans for active employees with no financial subsidy in 2014 or 2015.
• 45% are somewhat to very likely to offer an employer-sponsored health
plan to only a portion of their population and direct ineligible
employees to the Exchanges.
• Today, 23% of companies are very confident that they will continue to
offer health care benefits for the next 10 years, down from a peak of
73% in 2007.
** Use of ABHPs is surging but must be part of a broader strategy to be

Account-based health plans (health savings accounts and health
reimbursement arrangements) can be an important element in an
organization's health benefit management if the right incentives and
employee education are attached. Today, 59% of companies have an ABHP in
place, with another 11% expecting to add one by 2013. But ABHPs will not
necessarily result in lower costs without significant enrollment. Our
results show that employers that take a comprehensive approach to ABHPs
(e.g., increasing employee and provider accountability while at the same
time helping to cultivate smarter health care consumers) are the ones
that have gained the greatest advantage. Using a health savings account
(HSA) can also effectively align with an employer's retirement strategy
by providing employees with a tax-advantaged vehicle to pay for current
costs while accumulating wealth for retirement.
• Total replacement ABHPs are also on the rise, representing nearly 12%
of companies with an ABHP — up from to 7.6% in 2010.
• ABHP enrollment has nearly doubled in the last two years — surging
from 15% in 2010 to 27% in 2012, and the move toward total replacement
ABHPs is continuing.
• About 10% of respondents say employees and dependents enrolled in an
ABHP are better at reducing lifestyle risks than those enrolled in
• Nearly four out of 10 companies currently consider their HSA for
actives part of their retiree medical strategy, and another 20% are
planning or considering such a strategy over the next three years.

Regardless of the future of health care reform, providing a
cost-effective health benefit plan will remain a differentiator for many
companies when it comes to attracting and retaining top talent.

Comment: Health benefit programs of large employers have been the
mainstay of health care coverage for working families. The Affordable
Care Act relies heavily on the stability of these programs. However,
only 23 percent of these employers are very confident that they will
continue to offer health care benefits ten years from now.

Although this report discusses many observations and strategies for the
future, one trend that is of concern is the greater reliance on
high-deductible health plans with health savings accounts or health
reimbursement arrangements (aka account-based health plans or ABHPs).
Although these plans seem to be satisfactory for the healthy workforce
and their young healthy families who really don't need much care, there
remains the serious concern that such accounts deter patients with
significant needs from receiving the care that they should have.

Quoting from this report, "An important question is whether ABHPs are
having a positive or negative effect on employees' utilization of health
care services and ultimately on improving health outcomes. There are
significant information gaps about health behaviors and outcomes for
employees and dependents enrolled in an ABHP, compared with non-ABHPs."

The prevailing attitude seems to be that conditions in health care
financing are so bad that we have to do something, no matter what. It
doesn't seem to matter whether or not the changes are known to be
beneficial, just so long as we don't enact a single payer system.

Everyone understands that a single payer system would work, but it's
just not feasible. Not feasible? That's nonsense. We know that single
payer would be highly beneficial, creating much greater value in health
care spending. Enacting single payer is the only feasible approach we have.

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