Large employers say the cost of health-care plans will grow 5 percent next year, to an average cost of more than $14,000 per employee. The increases, reported in a new survey of 148 large companies, were attributed largely to expensive specialty drugs and individuals with high medical costs.
The average 5 percent hike is modest in comparison to the double-digit premium increases that insurers that sell plans in the Affordable Care Act marketplaces have been requesting, citing the financial challenges of the marketplace and threats by the White House to discontinue federal subsidies.
"It’s the fifth year in a row that employers are saying their costs will rise 5 percent. It’s not great, because it's still multiples of wage increases and general inflation ... but it’s not the volatility you’re seeing in the public exchanges," said Brian Marcotte, president of the National Business Group on Health, a nonprofit organization whose members are large employers, including 73 Fortune 100 companies.
According to the survey, employers will shoulder approximately 70 percent of those health costs, leaving employees on the hook for an average of $4,400, through premiums, out-of-pocket costs and contributions to health savings accounts.
The survey found that an ongoing shift toward high-deductible plans will continue, with 40 percent of employers offering one as the only plan option next year -- an increase from last year. Nearly all employers -- 90 percent -- will offer at least one high-deductible plan in 2018.
The average deductible in such a plan was $1,500 for an individual and $3,250 for a family, although the employer often makes a contribution to a health savings account that significantly reduces the cost to individuals.
Marcotte said that much of the current debate over health care has been about the question of access: whether people have health insurance.
In the employer-sponsored health plan world, where there is greater stability, the focus is largely on containing costs. Companies are increasing their use of cheaper telemedicine consults, with nearly all employers offering plans that allow phone and videoconferencing with doctors if it is allowed in their state. More employers are opening on-site health centers. There's also a growing push toward health plans that reward employees for activities that result in more efficient care, such as reduced premiums when they actively manage chronic diseases.
Not all cost-containment efforts may succeed. A study by the Rand Corp. found that, instead of replacing visits that would have otherwise taken place in person, most telemedicine consults were new utilization -- made up of complaints that would never have triggered a visit to the doctor. The ease of picking up the phone could thus increase the use of health-care resources; the researchers found that yearly spending on acute respiratory illness increased by $45 per user.
An emerging concern for employers is the cost of specialty drugs, expensive medications that can cost thousands or tens of thousands of dollars a month. A quarter of employers cited specialty drug costs as the biggest driver of spending in 2017, and 80 percent ranked it in the top three contributors to rising costs. In contrast, three years ago only 6 percent of employers cited it as the major contributor to high spending.