Increased adoption of consumer-directed health plans (CDHPs) and an increased emphasis on employee health management programs helped U.S. employers hold their health benefit cost increases to an average of 4.1 percent in 2012, the lowest average annual increase since 1997, according to a new survey from global consulting firm Mercer.
The yearly National Survey of Employer-Sponsored Health Plans showed growth in the average total health benefit cost per employee slowed from 6.1 percent last year to just 4.1 percent this year, with an average cost of $10,558 per employee. Employers with 500 or more employees, however, experienced a higher increase of 5.4 percent cost growth and a higher average cost.
"Employers are very aware that in 2014, when the health reform law's provisions kick in, they will be asked to cover more employees and face added cost pressure," said Julio Portalatin, president and CEO of Mercer, in a press release announcing the findings. "They've taken bold steps to soften the impact and it's paying off already."
Much of the credit for the lower increases, Mercer researchers suggested, is due to the continued growth and acceptance of CDHPs – health plans that typically feature a high deductible and are tied to pre-tax health savings accounts (HSAs). Advocates say these plans bring a needed measure of consumer involvement in healthcare decisions that can help reduce costs since the health plan member has more financial responsibility for the care they receive.
According to this year's survey of more than 2,800 employers with 10 or more employees, enrollment in CDHPs jumped from 13 percent to 16 percent of all covered employees. In the past two years, the portion of employers offering CDHPs has increased to 22 percent from 17 percent, with the growth even greater among organizations employing more than 500 – up from 23 percent to 36 percent. And more than half (59 percent) of very large employers – those with more than 20,000 employees – now offer a CDHP plan as one of their health plan choices.
"If we're not already at the tipping point for CDHPs – and we may well be – at this rate of growth it's coming soon," said Sharon Cunninghis, Mercer's U.S. business leader for health and benefits, in a prepared statement.
According to the current survey, the average cost of covering an employee under a CDHP with an attached HSA is more than 20 percent less than the overall average cost of coverage for an employee enrolled in a PPO ($7,833 per employee in a CDHP versus $10,007 for a PPO).
Cunninghis pointed to the coming advent of state health insurance exchanges as one means by which employers are gauging their CDHP offerings. Under the exchanges, the so-called bronze plans will only need to provide an actuarial value of 60 percent of eligible health plan expenses.
"Some employers are resetting their health plan value to move closer to that minimum, and saving money as a result," she added.
Employers are also increasingly providing more robust health and wellness programs as part of their overall health benefits packages, the survey noted. These programs are most common among the very large employers – offered by 53 percent of employers with more than 20,000 employees. Among this group, roughly three-of-four companies say they are getting a positive return on investment in these programs.
Trends in 2012 for wellness programs showed marked increases by employers of providing both incentives and penalties in their programs (up to 48 percent of employers in 2012 compared to just 33 percent in 2011).