By Shelby Livingston, Crain News Service
ITASCA, Ill. (Aug. 24, 2015) — The vast majority of employers are reporting increases in the premiums they currently pay for employee health plans, according to a new survey by Arthur J. Gallagher & Co.
The survey, conducted from January to April and released Aug. 20 by the brokerage, found that 90 percent of employers are facing premium increases in employee health plans for the current plan year.
Sixty percent of employers said the premiums they pay for employee health plans increased more than 4 percent in 2014, and 23 percent reported increases of more than 10 percent.
Despite the increases, 97 percent of employers reported they would continue providing employer-sponsored medical benefits to their employees.
Employers are deploying several strategies to control healthcare spending. Among the most common are shifting costs to employees at 67 percent and changing medical plan insurers at 49 percent, according to the survey.
Additionally, 36 percent of employers said they offer employees a health savings account (HAS) along with a high-deductible health plan. The survey showed in-network family plan deductibles average $3,000, while out-of-network deductibles average $4,500. Annual deductibles for employee-only in-network plans average $1,200, and out-of-network coverage deductibles average $2,000, according to the survey.
In the next three years, 35 percent of employees said they may change their healthcare funding arrangements, with most of those reporting they may become self-funded. Twenty-two percent said they may implement mandatory prescription generic drug policies to control costs.
Forty-two percent of all employers surveyed — and 70 percent of employers with more than 1,000 employees — offer wellness programs, Itasca-based Arthur J. Gallagher http://www.ajg.com/ reported. Of those with wellness programs, many are investing in less traditional components: 43 percent include weight management, 31 percent include financial well-being, and 30 percent offer healthy vending options.
However, 72 percent of employers said employee participation in the wellness program was the greatest challenge. Many reported driving participation with incentives, including cash or gifts, premium differentials and contributions to HSAs, health reimbursement arrangements and flexible spending accounts.
“By far, the top benefits concern among employers is the continued rise in the cost of providing group medical coverage for employees,” James W. Durkin Jr., president of Gallagher Benefit Services Inc., Arthur J. Gallagher's employee benefits consulting and brokerage arm, said Aug. 20 in a statement.
“Employers are examining all available options to rein in medical costs, while still offering competitive benefits packages that help them attract and retain the best employees in a tightening labor market,” Mr. Durkin said. “With the Cadillac tax due to take effect in 2018, employers are expected to increasingly turn to newer, alternative cost-control tactics.”
The survey includes more than 3,000 U.S. employers ranging in size from less than 100 employees to more than 1,000.
This report appeared on the website of Crain's Business Insurance magazine, a Chicago-based sister publication of Tire Business.