Large Employers View HIX as Viable

Survey data released by a national business group of large employers shows that while they do not have active plans to make a shift, members view the exchanges as a cost-effective option for certain population groups.

Although many states have taken an adversarial stance when it comes to public health insurance exchanges, large employers see the marketplaces as a cost effective alternative for certain population groups, including COBRA participants, young retirees, and part-time employees.

That is according to a survey released Wednesday by the National Business Group on Health.

Employers are not saying that they plan to take active steps to shift these population groups to the exchanges—a common concern—rather, they view the exchanges as a "viable option on an individual basis," said NBHG president Helen Darling, in a telephone interview.

Some 41% of employers reported that COBRA plan participants will find the public health exchanges to be the most cost-effective option for them while 26% said some of their pre-65 retirees will opt to join the exchanges. In addition, 20% of employers responded that some of their part-time employees could move to the public exchanges.

The findings are part of an annual employer survey released by NBGH, an association whose members include more than 365 large, national employers, including American Express, CBS Corp., and Time Warner. More than 100 employers, most with more than 10,000 employees, responded to the survey.

Employers are also looking at private health insurance exchanges. Some 30% responded that they are considering private exchanges as an option for their active employees sometime after 2014. Private HIX can be used by employers to transition to a defined contribution strategy where the employer puts a cap on how much to spend on employee healthcare benefits.

Private Exchanges
Private exchanges are being developed by consulting firms, such as Aon Hewitt, Mercer, and Towers Watson, as well as retailers, such Walgreens, and insurance brokers. Aetna and Cigna have announced plans to develop proprietary exchanges.

Darling says employers are tentatively embracing the new payment models introduced through healthcare reform, including accountable care organizations and patient-centered medical homes. Noting that health plans play important roles in both ACOs and PCMHs, she said self-insured employers will have to figure out how to participate in these opportunities.

Employers identified wellness initiatives (58%), consumer-directed health plans (52%), and increased employee cost sharing (41%) as their three most effective tactics for controlling costs.

Employer interest in CDHPs has remained steady in recent years with almost three-quarters of employers (72%) offer at least one CDHP. However, some employers are moving exclusively to CHDPs. Some 22% plan to offer only a CDHP in 2014. That is up from 19% in 2013.

While employers do not expect to make big changes in the proportional sharing of healthcare premiums, employees will see cost increases under certain circumstances, including surcharges for spouses, dependents, and tobacco use.

A Shift in Family Coverage
Darling said that there is evidence that some employers are moving toward changing how they address family coverage with 9% of respondents reporting that they will base employee premium contributions on the number of dependent enrolled in 2014.

Last week United Parcel Service announced that it will drop coverage for working spouses.

Among the other report findings:

• The healthcare cost trend remains at 7% for the third consecutive year.
• Few employers—only 7% plan to increase their outcome-based wellness incentives to more than 20% of total plan costs.
• Only 3% of respondents expect to eliminate healthcare coverage altogether.
• More than four in 10 respondents (44%) currently have an on-site medical clinic in at least one location; 9% expect to build a clinic next year.
• The wellness programs most frequently offered are tobacco cessation (89%), health assessments (88%), and biometric screenings (83%).