Employee Benefits & Healthcare Reform: An Opportunity in Disguise
Jan 15, 2016
Employee Benefits & Healthcare Reform:
An Opportunity in Disguise
Survey Data Sources
• The J. Henry Kaiser Family Foundation• Roberts Woods Johnson Foundation • National Business Group on Health• Employee Benefit Research Institute (EBRI)• Health Insurance Plans• Price Waterhouse Coopers (pwc)• Towers Watson • AON Hewitt• Bswift• Alegeus Technologies • Aetna• Cigna• UHC• Etc. Etc. Etc.
Why an Opportunity in Disguise?
• The Affordable Care Act has put healthcare, and the cost
of healthcare, in the limelight
• Employees are expecting change
• ACA provides a stage from which to promote wellness,
personal responsibility, and present resources & tools
that can guide employees through the process
Premiums are Going Up and
Benefits are Going Down
Average Annual Premiums
Average Annual Premiums for Single and Family Coverage, 1999 – 2013
Average Annual Premiums and Contributions
Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2003 – 2013
2003 2013
$2,412 $4,565
$6,657
$11,786
Employee Contribution Employer Contribution
Average Annual Health Insurance Premiums and Worker Contributions for Family Coverage, 2003 – 2013
$9,068
$16,351
80% Total Premium Increase
89% Worker Contribution
Increase
Average Annual Deductible
Average Annual Deductible for Single Coverage, by Plan Type, 2006 – 2013
2006 2007 2008 2009 2010 2011 2012 2013
HMO $352 $401 $503 $699 $601 $911 $691 $729
PPO $473 $461 $560* $634* $675 $675 $733 $799
POS $553 $621 $752 $1,061 $1,048 $928 $1,014 $1,314
HDHP / SO $1,715 $1,729 $1,812 $1,838 $1,903 $1,908 $2,086 $2,003
All Plans $584 $616 $735* $826* $917* $991 $1,097* $1,135
Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013
Average Deductible of $1,000 +
Percentage of Covered Workers Enrolled in a Plan with a General Annual Deductible of $1,000 or More for Single Coverage, By Firm Size, 2006 – 2013
Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013
What are Employers Doing?
Reactions to Rising Costs
• Adjusting plan design is perhaps the oldest technique—and it hasn’t worked
Dropping Coverage Entirely
Offering Only HDHP Options
Adopting a Defined Contribution Program
Reducing Coverage
Decreasing Premium Subsidies for EE's
Offering a HDHP Option
Adjusing Plan Design
3%
16%
17%
22%
27%
47%
59%
Employer Strategies in Response to Rising Costs
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
Enrollment in HDHPs Has Tripled Since 2009
Enrollment in Employer-Sponsored Health Plans by Type of Plan, 2009 – 2014
61%
8% 14%
63%
13% 9%
57%
17%12%
57%
17% 13%
54%
21%
9%
51%
26%10%
PPO Plans
High-DeductiblePlans
HMOPlans
- 16% - 29%+225%
’09 ’10 ’11 ’12 ’13 ‘14 ’09 ’10 ’11 ’12 ’13 ‘14 ’09 ’10 ’11 ’12 ’13 ‘14
Source: PwC Health Research Institute, Medical cost trend: Behind the Numbers 2015, June 2014, based on PwC 2014 Touchstone Survey
Market Traction
• Account-based health plans continue to gain traction in the market...
47%of employers now
offer HDHPs
60%of employers now
offer FSAs
42%of employers now
offer HSAs
23%of employers now
offer HRAs
Of those employers now offering HDHPs:
53%Offer incentives to choose HDHPs –
including HSA
contributions
66%Indicate HDHP / HSA
enrollment is growing or significantly
growing
30%Estimate of
employee population now enrolled in
HDHPs
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
HDHP / Firm Size
Among Firms Offering Health Benefits, Percentage that Offer an HDHP / SO, by Firm Size, 2013
Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2013
HDHP Enrollment
Percentage of Covered Workers Enrolled in an HDHP / HRA or HSA – Qualified HDHP, 2006 – 2013
Source: Kaiser / HRET Survey of Employer-Sponsored Health Benefits, 2006 – 2013
HDHP as the Single Option
Under Consideration
44%
38%Not Under
Consideration
AlreadyImplemented
18%
Are you considering implementing a high-
deductible plan as a full replacement option for
medical benefits over the next 3 years?
Most employers are considering or already offer a High-Deductible plan as the only option for employees
Source: PwC Health Research Institute, Medical cost trend: Behind the Numbers 2015, June 2014
Telemedicine
• Potential savings of $6B per year
Currently Implemented Considering in 2015 Considering in 2016 or 20170%
10%
20%
30%
40%
50%
60%
70%
80%
22%
37%
71%
Source: Towers Watson, 2014
Employers are looking for solutions to combat rising healthcare costs, as well as convenient solutions for employees
What’s Working?
Base Year 1 Year 2 Year 3 Year 4 Year 5 Year 6$2,800
$3,000
$3,200
$3,400
$3,600
$3,800
$4,000
$4,200
$4,400
“Option” HRA / HSA
Source: 9th Annual Aetna HealthFund Study
Savings based on both plan and member spending
• Based on normalized allowed claim PMPM trends averaged over 6 years
Option HRA / HSA
Savings$108
Savings$120
Savings$168
Savings$204
Savings$264
Savings$300AHF study group
Control group
“Full Replacement” HRA / HSA
Source: 9th Annual Aetna HealthFund Study
Base Year 1 Year 2 Year 3 Year 4 Year 5 Year 6$2,800
$3,000
$3,200
$3,400
$3,600
$3,800
$4,000
$4,200
$4,400
Savings$432
Savings$432Savings
$324Savings$336
Savings$324Savings
$228
Control group
AHF study group
Savings based on both plan and member spending
• Based on normalized allowed claim PMPM trends averaged over 6 years
Full Replacement HRA / HSA
Average Spend
Source: 9th Annual Aetna HealthFund Study
Total pharmacy costs
Inpatient facility
Ambulatory facility
Emergency room
Specialist physician
Primary physician
Radiology
Lab
$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 $1,700 $1,800 $1,900 $2,000
Difference-16%
Difference-5%
Difference-4%
Difference-9%
Difference-9%
Difference-7%
Difference-4%
Difference-1%
AHF study group
Control group
Households Spend Less for All Types of Health Costs Versus a Matched Population
2x
…more logins to provider websites
…more likely to fill out a health assessment
…more use of the personal health record
…more use of price information tools, including pharmacy drug costs and Member Payment Estimator
Source: 9th Annual Aetna HealthFund Study
Members Use the Information Provided
• Online tools for cost of care and benefits information are used overwhelmingly more by consumers with HDHPs
Will CDH Drive Behavior Change?
Not Sure
No - Not at All
Yes - Somewhat
Yes - Significantly
6%
14%
42%
38%
9%
8%
55%
28%
Employer Employee
HDHPs and Tax Advantaged Accounts are Designed to Make Employees More Aware and Accountable for Healthcare Spending;
Will it Change Behavior?
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
Education is Critical
HSA Understanding: 10 Years Later
2.8% Of respondents got 9 of 9 questions correct
30% Of respondents “passed” with 7 of 9 questions correct
My employer owns my HSA
If I don't use my funds by the end of the plan year, I lose them
I can have a healthcare FSA and an HSA at the same time
I can change my annual election amount at any time that I want to
I can contribute to an HSA regardless of which health plan type I'm enrolled in
If my balance reaches a certain amount, I can invest my HSA contributions
I gain access to my full annual HSA election amount on the first day of the plan year
I can leverage my HSA savings to cover future healthcare expenses into retirement
Contributions that I make to an HSA are tax-free
73%
64%
50%
53%
46%
59%
37%
74%
82%
Consumer Responses to HSA Understanding Quiz(Correct Answers)
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
FSAs Have Existed Much Longer...
.3% Of respondents got 9 of 9 questions correct
50% “passed” with 7 of 9 answered correctly
If my balance reaches a certain amount, I can invest my FSA contributions
I can change my annual election amount at any time that I want to
My employer owns my FSA
I can leverage my FSA savings to cover future healthcare expenses into retirement
I'm allowed to roll over a certain amount of unused funds at the end of each plan year
If I don't use my funds by the end of the plan year or grace period, I will lose them
I can contribute to an FSA regardless of which health plan I am enrolled in
I gain access to my full annual FSA election amount on their first day of the plan year
Contributions that I make to an FSA are tax-free
77%
70%
31%
66%
46%
73%
79%
85%
88%
Employee FSA Perceptions(Correct Answers)
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
More Consumer Support Needed
Consumers want better benefit communication and decision-support from employers
Most employers offer limited support today:
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
65% 60% 33% 17%
Communicate about health
benefit offerings only during open
enrollment
Rely only on plan summary
documents and enrollment
forms
Offer plan comparison tools and multimedia & education content
Offer an interactive recommendation engine based on
personal data inputs
Consumers Value Easy-to-Use Account Features
• Debit card is #1 ranked account feature across all benefit account types
• 75% of consumers value integration of insurance claim data to streamline review and payment
• 65% of consumers value multi-channel account access (online, mobile, etc.)
• 60% of consumers value self-service features (such as mobile claim submissions, online bill pay, etc.)
Source: Alegeus Technologies, Research Results Unveiled: 2014 Consumer and Employer Healthcare Benefits Survey
Wellness Incentives
Wellness Incentives
>500 employees Base = employers offering wellness programs
2012
2013
2014
15%
12%
10%
36%
33%
30%
24%
25%
24%
21%
26%
27%
4%
3%
9%
Investment in Wellness Incentives per Employee,Large Employers
Less Than $50 $50 to $249 $250 to $499 $500 to $1,000 More than $1,000
Source: bswift SourceMedia Research, 2012 – 2014
Wellness Incentives
>500 employees Base = employers offering wellness programsSource: bswift SourceMedia Research, 2012 – 2014
Additional paid time off
Reduced co-pay / co-insurance for Rx
Eligible for richer plan and / or lower deductible
Additional contributions to a HSA or HRA
Wellness points to convert to cash, gift cards, etc. or gift cards and cash
Health insurance premium discounts, credits surcharges or penalties
4%
9%
13%
13%
38%
58%
3%
6%
6%
12%
48%
64%
2%
5%
7%
27%
56%
64%
Types of Wellness Initiatives, Large Employers2014 2013 2012
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