Employers consider alternatives as health care costs rise

U.S. employers want a more efficient system of health care delivery that is better able to control costs, according to a recent report from the HR Policy Association and the American Health Policy Institute, based on interviews with chief human resources officers at large corporations.

  • Many HR professionals believe that rising health care costs are putting U.S. employers at a disadvantage globally and hampering job growth and economic growth in the United States, the report noted.

The Affordable Care Act has caused large employers to closely examine their benefit costs, the reasons behind the cost increases in recent years, and their future role in health care delivery.

  • There’s no consensus on the future of health benefits. “Some believe that employers may, in fact, continue to absorb increases in the cost of health care and greater regulatory burdens no matter how great they might become. Others, including financial analysts and even some principal architects of the Affordable Care Act, see the collapse of the employment-based system as inevitable,” the report states.

Only 50% of chief HR officers said their company will continue to offer health benefits for the foreseeable future, regardless of what most other large employers do, while 16% disagreed with that statement.

Jeffrey McGuiness, CEO of the HR Policy Association and co-author of the report, says, “Large employers have used self-insured plans to provide health care to their employees and dependents, as well as retirees, for decades and view it as essential to a productive and competitive workforce and as the most valued benefit in compensation packages. However, the cost of health care continues to escalate despite this and is causing large employers to not only question the long-term viability of the current system of employment-based care, but also to begin moving toward alternative health care delivery methods.”

  • Among the alternatives are high-deductible health plans, private insurance exchanges, or not offering health benefits, meaning that employees will obtain coverage on public insurance exchanges or go uninsured.

At least 50% of respondents said their company offers a consumer-directed health plan (a high-deductible plan with a personal account), or plan to do so. In fact, 23% said they offer a consumer-directed plan as the only option for workers, or plan to do so.

  • Forty percent of respondents said they are considering private exchanges, but have not yet made a decision, while 37% said they considered private exchanges, but decided not to go that route.

The strategies of the past, such as HMOs, PPOs and self-insuring, have helped to contain health care costs somewhat, but have not resolved long-term cost concerns. The most successful efforts have occurred when a very large company or group of companies in one region have combined their purchasing power, the report notes.

  • “Large employers see the current health care environment as being in flux. They have a strong interest in figuring out how best to provide health care to their employees in the current environment and which alternative approaches will work best in the emerging new world of health care,” says Tevi Troy, president of the American Health Policy Institute and co-author of the report.

*Modified from an eba.benefitnews.com article

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