Health Insurers, Employers Out of Synch

The Presidential election is not the only choice facing Americans this fall. Those who are offered health insurance through their employers' group plans will have coverage decisions to make during the annual open enrollment period.

But the results of a recent survey indicate some alarming gaps in knowledge among employers in the wake of the Patient Protection and Affordable Care Act.

First, according to the Deloitte Center for Health Solutions, which has released the findings of its annual survey, employers are unaware of solutions that could improve the safety and quality of care while simultaneously reducing the cost of care.

And most employers say their company is “not well prepared” to implement the 2014 provisions of the Patient Protection and Affordable Care Act. They have heard about the individual mandate; 72% reported they were familiar with it, but understanding payment and delivery system changes? Not so much.

But here is what is really scary: The survey respondents are exactly the folks who need to be up to speed on PPACA and its implications. The 2012 Deloitte Survey of U.S. Employers is based on the online responses to 32 questions from 560 randomly selected individuals, including business owners, C-suite executives (CEOs, CFOs, and human resources officers), as well as the people who are responsible for health benefit program decisions. The businesses they represent range in size from 50 employees to more than 2,500 employees.

Among the survey items covered were strategies for employee health benefits coverage and cost containment, opinions about healthcare system performance and cost drivers, and awareness of key features of the PPACA.

The survey results confirm a Deloitte suspicion that there is a lack of alignment within companies concerning their healthcare strategy. Bill Copeland, a principal at Deloitte Consulting and one of the survey authors, notes that CEOs and CFOs often had different answers to questions than the human resources officers. For example, 77% of responding CEOs listed government regulation as a major influence on overall healthcare costs versus 49% of benefits executives.

According to the survey results, employers aren’t sure if insurers are part of the solution or part of the problem. Copeland notes that health plans rated next–to-last, ahead of retail clinics, among the top seven healthcare investments they value.

Only 39% of employers placed a high value on their investment in health insurance plans although they rank insurance company costs among the top three influencers of healthcare costs. In terms of investment value, employers tend to be more traditional in their outlook with investments in primary care and prescription drugs rated as having high value.

Copeland says the findings may reflect a general outlook among employers that health plans are not clearly communicating how they can help employers lower their cost trends. While acknowledging that the appreciation of primary care is "a huge positive on the employer side," he wonders if employers really know what they might do differently around primary care or prescription drugs to help lower their costs.

For example, there seems to be some confusion among employers as to what steps to take to develop their benefits strategies. Wellness, for example, received a middle-of-the-road rating around value but increasing wellness programs was ranked among the top three changes employers expect to make in their benefits strategy.

Copeland suggests that employers are unaware of all their options and are reacting more to all of the industry talk surrounding wellness rather a demonstrated return on investment.

This all means health insurance plans probably need to do a better job of helping employers connect the dots between benefits, provider incentives, and outcomes and the role insurers play in bringing everything together into a single package.

That brings us back to the PPACA. Employers are much more familiar with possible penalties they might incur than they are with provisions that are designed to help reduce their healthcare costs, such as the creation accountable care organizations and the introduction of bundled payments. Insurers are touting these measures to the media and providers, but somehow employers are not getting the message.

Deloitte's survey results certainly raise questions about the role health insurers should play in educating their employer customers. There seems to be an opening here. Employers are concerned about their benefit strategies and they are not sure what steps to take to resolve cost issues. Insurers are talking to employers but there is a disconnect in the conversation that needs to be resolved.