Large employers committed to health coverage

By BenefitsPro

By Dan Cook

If there’s been any lingering doubt on the question, new data is in confirming that large employers are committed to providing subsidized health coverage to their employees, regardless of Obamacare.

Almost all of the 420 respondents to a Towers Watson survey inquiring about health coverage strategies in the era of healthcare reform said they would not consider discontinuing the benefit.

However, they are concerned about reining in costs.

Nearly three-quarters of large employers surveyed by Towers Watson believe healthcare reform will drive up the cost of providing healthcare to their employees. To address those increases, they say they will increasingly look to wellness programs and better coordination with health care providers to control the additional costs they see themselves incurring as a result of healthcare reform.

The Towers Watson survey, “Health Care Changes Ahead,” offers the latest evidence that wellness programs appeal to corporations as a way to have a healthier workforce that makes fewer demands upon employer-sponsored health insurance. And, employers are going to be demanding more of their health providers in terms of prices for procedures and keeping their workers fit.

The wellness program and health provider data is among the more tantalizing information that emerged from this study of company representatives whose employers collectively employ 8.7 million workers.

Another nugget: The survey indicates that private health insurance exchanges will win corporate support much more quickly than state exchanges — thereby validating those insurers that have already said they will create private exchanges.

The primary finding of the study was that 88 percent of those responding say their companies will continue to offer employer subsidized health coverage plans to their workers, with another 11 percent unsure of their plans. More than 80 percent agreed that coverage is and will continue to be “an important part of (the) employee value proposition.

Among the survey’s other findings:
  • Nearly three-quarters of respondents believe healthcare reform will result in significant changes in the way their current employees experience healthcare coverage. Cost shifting is unavoidable.

  • Big bosses — CEOs and CFOs — will find themselves spending more time dealing with healthcare costs.

  • Companies are considering various actions to control costs: changing plan designs, emphasizing outcome-based incentives and reducing coverage subsidies for spouses and dependents.

  • Wellness plans’ popularity was underscored as 70 percent agreed they have “a stronger commitment … (to) wellness and health management programs.”

  • Employer subsidies for retiree medical coverage continue to erode. “The percentage of employers that are somewhat or very likely to discontinue their employer-sponsored plan for post-65 retirees will grow from 25 percent in 2014 to 44 percent in 2015,” the survey said. “And with the advent of public exchanges making new solutions available for pre-65 retirees, the percentage of employers that are somewhat or very likely to discontinue their plan for pre-65 retirees will jump from 10 percent in 2014 to 38 percent in 2015.”
  • State exchanges don’t represent a suitable alternative for employee health coverage — 88 percent lacked confidence in state exchanges in their first year, and 61 percent felt the state exchanges wouldn’t be working well in 2015.

  • Private exchanges were preferred. These were seen as becoming a viable alternative in 2014 by 37 percent, and by 57 percent by 2015.
The two-part survey focused both on big-picture questions, such as which direction a company’s healthcare planning might take, and on specific numbers, e.g., how much do you think you’ll spend per employee for health coverage next year?

Perhaps surprisingly, respondents don’t see big jumps in per employee health coverage costs next year.

Their responses suggest that health care costs will increase by 5.2 percent in 2014 over 2013’s costs, down from an expected 5.9 percent increase in 2013. Projected 2014 per employee total cost is $12,769, compared to $12,136 in 2013.

The new Obamacare excise tax, also known as the Cadillac tax, is raising some concerns. “Sixty percent of employers report that the excise tax will be an important factor in framing health care strategies over the next two years,” the researchers said.

Meanwhile, technology designed to improve employee health continues to fascinate those in the C Suite. “The use of personalized digital technologies to improve employee health engagement is on the rise,” Towers Watson said. “Forty-three percent of companies plan to use the technologies by 2014, and another 31 percent are considering its use for 2015 or 2016.”

Overall, the survey paints a picture of large employers methodically and strategically combing through their current health coverage and available alternatives, and making changes in a prioritized fashion.

“Employers are balancing many competing factors as they revisit their financial commitment to health benefits and their ability to maintain a sustainable plan in the face of annual cost increases and the excise tax.

“They see health care benefits as an important part of their total rewards mix. And as they weigh new options, they will be looking to keep their plans affordable and viable for the long term,” said Ron Fontanetta, a senior healthcare consultant at Towers Watson.

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