A recent survey of large employers (companies with at least 1,000 workers) shows health insurance benefits for its workers is on shaky ground in the long-term.
Towers Watson/National Business Group issued its 18th annual report on health insurance trends among large employers last week. The results are based on the responses of 583 firms that cumulatively employ 11.3 million full-time workers, 8.5 million of which receive health insurance benefits.
The types of industries run the gamut. Thirty-percent of companies responding represented manufacturing; 16% were from financial services; 13% were from healthcare, and 11% represented the IT/telecom industry.
The report states that only 26% of employers are "very confident" their company will provide health benefits in 10 years. Shocked? I was. Five years ago, that percentage was 73%. But confidence in general is lagging among the employers surveyed about what their roles would be in the future because of the Patient Protection and Affordable Care Act (PPACA).
For example, last year, when asked about the importance of employer subsidies for health benefits, 71% said it was very important. This year, it's down three percentage points, which isn't much, but only 54% of companies surveyed indicated the same level of value in 3–5 years.
The 40-page report also shows employers continuing to lean on workers for more accountability and cost sharing. Nothing new there; however, this year, the report also focused on companies it deemed "best performers," which are firms that held down the rate of health care cost increases over four years.
There were 45 firms that met the criteria. The report doesn't identified them by name, but rather by strategies used to keep its cost increases to about 2.2%, on average, which is just above the rate of inflation. In addition the firms also report reduced employee expenses.
Based on the report's findings among its "best performers," three trends have emerged as takeaways for insurers who are not yet offering these benefits widely or are unsure of their viability:
1. Embrace telehealth. The focus on technology as a solution has never been as intense as now. With consumers using their smartphones to do mobile banking, something that once seemed out of reach because of issues surrounding security and complexity, they are wondering what is taking healthcare so long to catch on.
Private companies with a foot in healthcare via pharmacy and onsite clinics, such as Rite Aid, are stepping into the space offering online visits with a physician. The "best performers" in the Towers Watson study are early adopters to telemedicine, too.
The IT/telecom industry is so far (and unsurprisingly) the biggest fan of using this method as a way to keep its workforce healthy, though other companies lead the way in providing for e-visits, remote monitoring, and like. It's one of the biggest emerging trends; by next year, 34% of the 45 "best performers" plan to expand these offerings to employees.
2.Use outcome-based incentives instead of penalties. As the parent of a rambunctious 6-year old boy, I am very familiar with this strategy. I know, for example, that I have a better chance of getting him to make his bed if I promise him 10 minutes of playtime on the Wii rather than threatening to take it away if he doesn't do what I ask.
The "best performers" know this, too, and have data to back it up. A perfect example is tobacco-use status. According to the report, 42% of companies surveyed penalize smokers about $50 per month. Among the best performers, 51% use an incentive system, such as smoking cessation programs.
Furthermore, 40% of them also extend the incentive to spouses and dependents. Where's the reward? On the balance sheet and at home. The best performers saved more than $2,200 per employee when compared to low performing companies (those with 10.3% cost increases).
These are large firms; thousands of dollars in savings can turn into millions quickly depending on the number of workers employed. But board room members weren't the only ones saving money. Its employees saved, on average, $500 in premiums and $400 in point of care services. Get rid of the stick, and offer the carrot.
3. Use incentives and emerging payment models to increase quality of care. Health insurers are well aware of all the buzzwords in payment: "accountable care," "value-based purchasing," and "bundled payments," but so are employers who see insurance for their workers as a value proposition that needs to be solved today for the long-term.
The report's authors say survey responses point to employers interested in moving into the supply side of plan management. For example, 13% of the best performers currently contract directly with hospitals, physicians, and/or ACOs. By next year, that percentage is expected to grow to 31%.
It's among the top three sharpest increases in strategies the best performing employers say they plan on implementing by next year. The other two involve offering incentives to providers to increase quality (25%) or use a coordinate care approach (22%).
The report offers a lot of insight on employers and insurers, but these three things can affect how quickly a tipping point is reached in care, quality, and cost for both parties.
Jacqueline Fellows is a contributing writer at HealthLeaders Media.