Big employers more ‘activist’ on health costs, push back on high-deductible plans

Employers have begun playing an increasingly “activist” role in curbing healthcare costs, a trend that is expected to accelerate next year, according to the latest survey from the National Business Group on Health (NBGH).

Nearly half of all companies polled for the annual Large Employers’ Health Care Strategy and Plan Design Survey said that they are doubling down on driving delivery system changes, using narrow network delivery models such as accountable care organizations, direct contracting and high-performance networks to shift healthcare costs. Nearly 60% plan to use these strategies by 2021.

In a surprise shift, fewer employers (30%) plan to offer consumer-directed—or high-deductible—health plans as the only option for their employees compared to 39% in 2018. The survey results were based on responses from 170 large employers representing coverage of 19 million employees and their dependents conducted between May and June 2018.

Brian Marcotte, president and CEO of the NBGH said he believes the growing interest in consumer-directed health plans was driven in part by employer’s concerns about the Affordable Care Act’s Cadillac Tax to go into effect in 2018. But that tax has been delayed twice by Congress and isn’t expected to go into effect until 2022.

“There’s a view it may continue to be kicked down the road. So I think employers are relaxing from that perspective,” Marcotte said.

But there may also be additional reasons, he said.

“Are we at a tipping point in terms of cost sharing? Although employers do contribute to health savings accounts, on average $500 for an individual and $1,000 for a family, high deductible plans are a challenge,” he said. “We also have very low unemployment so is a war for talent playing a role in this as well?”

Recent moves by Congress to expand the flexibility of health savings accounts may be a factor in reversing that trend toward consumer-directed health plans in the future, Marcotte said.

“Employers are very interested in adding more flexibility into these plans,” Marcott said. He pointed to what consumer health plans did to reboot plan design and the key role of health savings accounts in making them work.

“There’s a lot of rigidity in what you can do and what you can’t do if you have a health savings account,” Marcotte said. “Building back in flexibility, employers would like to cover more value-based services and provide a higher level of coverage. Whether it’s chronic condition management or preventative services or Centers of Excellence, there is a real opportunity to get back into design based on value.”

Overall, the survey of employers found that they project their healthcare benefit costs are expected to rise about 5% for the sixth year in a row, reaching $14,800 per employee in 2019 compared to the $14,099 employers project in costs per employee in 2018.

The survey also found:

• Drug costs: Half of the employers (49%) said they believe the drug supply-chain model needs to be overhauled and simplified and 75% said they do not believe drug manufacturer rebates are an effective tool to drive down drug costs.
• PBMs: Employers expressed concern about industry consolidation between health plans and pharmacy benefit managers, with 56% indicating they are skeptical the consolidation will lower costs or improve quality and customer experience.
• Mental health coverage: Employers are upping the ante on mental and behavioral health services. That includes 58% offering self-directed online resources for mental health benefits next year compared to 53% in 2018, as well as 39% offering flexible work schedules to allow employees to seek care during regular business hours compared to 33% in 2018.
• Opioids: The vast majority of employers said they were concerned or very concerned about the inappropriate use of opioids with one in four indicating the biggest impact has been in pharmacy costs followed by absenteeism (16%) and the death of an employee or dependent (12%). About 80% said they approve of using limited supplies, as well as implementing CDC prescribing guidelines and covering alternative therapies (32%).
• Digital tools: More than half of companies said they believe virtual care will play a significant role in health delivery moving forward and 43% believe artificial intelligence will play a major role.

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