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Survey: Employers Anticipate Continuing Rise in Healthcare Costs

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Employers expect health care costs to rise slightly more in 2011 than in 2010, according to a new report.

Towers Watson & Co., New York (NYSE, NASDAQ: TW), published this finding in a summary of results from a new health employer survey that tracks employers’ 2010, 2011 and 2012 strategies and practices. The survey was completed by 588 employers between November 2010 and January 2011.

Survey respondents collectively employ 9.2 million full-time employees and have 7.8 million employees enrolled in their health care programs, equating to a collective $81 billion in total health care expenditures.

Employers expect average costs for active health care benefits to increase by 7% in 2011, up from a 6% increase in 2010, the survey concludes.

The total anticipated annual costs per active employee are expected to reach $11,176, up 7.6% from $10,387 in 2010. And the average employee’s share of costs in 2011 is expected to rise 11.8%, to $2,660.

The report also revealed cost variations in the different plan types.

Account-based health plans (ABHPs) are the most affordable plan type, costing $730 less than HMOs for employee-only coverage and $2,118 less for family coverage.

Preferred provider organization (PPO) and point of service (POS) are the most expensive plan types, costing an average employee about $200, more than a typical health maintenance organization (HMO) plan for single-only coverage and more than $750 more for family coverage.

Among the report’s other findings in respect to planned benefit design changes:

– 68% of employers are moving to increase contributions for dependents, with 19% targeting per-dependent contributions, and 35% using or planning to implement spousal waivers or surcharges.

– 26% of employers plan to cease employer sponsorship; 25% plan to convert a current subsidy to a retiree health account, and 23% plan to eliminate employer-managed drug coverage for post-65 retirees and rely on Medicare Part D plans.

–28% of employers plan to differentiate cost-sharing for high-performance networks or centers of excellence in 2012. And 21% plan to adopt value-based designs over the next year.

–18% of employers plan to offer incentives or penalties to providers for coordination of care, use of emerging technologies or use of evidence-based treatments.

–A third of employers plan to reward or penalize their employees based on biometric outcomes (for weight and cholesterol), compared with just 7% in 2011 and 6% in 2010.

–Social media is one of the emerging creative strategies employers (9%) are using to improve employee health and well-being.

–Warren S. Hersch


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