Large employers expect 5 percent growth in health care benefit costs for 2018, survey finds

Large employers expect the cost of providing health insurance to their employees will increase by 5 percent next year, reaching an average of more than $14,000 per worker, according to survey published Tuesday by the National Business Group on Health (NBGH).

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The survey was conducted between May and June and included responses from 148 large employers. The employers' health plans cover more than 15 million employees and their dependents and represent a wide range of industries.

Employers expect modest cost growth

NBGH President and CEO Brian Marcotte said, "It's the fifth year in a row that employers are saying their costs will rise 5 percent. It's not great, because it's still multiples of wage increases and general inflation." However, Marcotte said the increases are modest compared with the "volatility you're seeing in the [Affordable Care Act] exchange" markets, where premiums in many states are projected to grow by double-digits.

The survey found that employers expect to pay for about 70 percent of the cost associated with providing employees health benefits, while employees would be responsible for the remaining 30 percent, which would average about $4,400 dollars per employee. Employees would pay those costs via premiums, out-of-pocket health care costs, and health savings account contributions, "Wonkblog" reports.

Employers look to contain costs

Amid the growing costs, the survey found that employers are looking toward strategies that could help contain health care spending. Marcotte in a release said, "Employers are recognizing that traditional cost control techniques alone aren't able to reduce costs to the point where they are no longer a drain on the bottom line." He added, "While employers continue to address costs through health care management and plan design efforts, they are also ramping up efforts to positively affect the supply side of the health care system by pursuing health care payment and delivery reform initiatives."

According to the survey, employers for the second consecutive year cited specialty drugs as the primary driver of health care cost growth. To address those costs, the survey found that 44 percent of employers said they plan to put in place site of care management tactics for 2018, up 47 percent from this year. In addition, 70 percent of employers said they will use more aggressive utilization management tactics in 2018.

In addition, the survey found that 90 percent of employers said they will offer at least one high-deductible health plan (HDHP) in 2018, and 40 percent of employers said an HDHP would be the only plan option they offer next year, compared with 35 percent in 2017. According to the survey, 28 percent of employers said they plan to offer HDHPs with a health reimbursement arrangement.

Further, 96 percent of employers said they will cover telehealth services next year in states where they are permitted. According to the survey, 56 percent of employers said they would cover behavioral telehealth services next year—more than twice the percentage that covered such services this year. The survey also found that nearly 40 percent of employers use some type of value-based benefit design (VBBD), and 18 percent of employers in 2018 will use VBBDs that encourage employees to use telehealth services.

The survey also found that 54 percent of employers said they plan to offer on- or near-site health centers next year. According to the survey, the number of employers offering such services could increase to nearly 66 percent by 2020.

In addition, the survey found that 88 percent of employers said they will use Centers of Excellence (COE) for certain procedures in 2018. According to the survey, between 21 and 48 percent of those COE contracts will include bundled or other types of alternative payment arrangements.

Marcotte said the survey also found "a big increase in the number of employers offering decision support, concierge services, and tools to help employees navigate the health care system." According to the survey:

  • 66 percent of employers said they will offer medical decision support and second opinion services in 2018, up from 47 percent that offered such services this year; and
  • 36 percent of employers said they will offer concierge services in 2018, up from 28 percent this year (Johnson, "Wonkblog," Washington Post, 8/8; NBGH release, 8/8; Lee, Modern Healthcare, 8/8; Hancock, "Shots," Kaiser Health News/NPR, 8/8).

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