Large U.S. Employers Project Health Benefit Cost Increases to Hold Steady at 6% in 2017, National Business Group on Health Survey Finds

WASHINGTON, DC--(Marketwired - Aug 9, 2016) - Despite skyrocketing specialty pharmacy costs, overall health care benefit cost increases at large U.S. employers are expected to hold steady at 6% again in 2017, according to an annual survey by the National Business Group on Health, a non-profit association of 425 large employers. The Large Employers' 2017 Health Plan Design Survey, the industry's first look at health benefit costs and plan design changes for 2017, also revealed that employees will not see major increases to their costs during this year's open enrollment season.

"Controlling health benefits costs remains a high priority for large employers," said Brian Marcotte, president and CEO of the National Business Group on Health. "While employers have been able to keep increases in check for the past few years, costs are still running at more than twice the rate of inflation and general wage increases, thereby threatening affordability. These cost increases, while stable, are both unsustainable and unacceptable." 

According to the survey, the 6% increase employers project for 2017 is identical to the increase they would have experienced in each of the past two years had they not made changes to their plan design. However, many employers expect to hold increases to 5% by making some changes to their plans. The survey is based on responses from 133 large U.S. employers offering coverage to more than 15 million Americans. 

"Interestingly, current estimates have health insurance premiums for the average public exchange plan increasing by at least 10%, about twice what large employers are projecting for next year. This is a clear indication that the employer-based health care model continues to be the most effective way to provide health insurance coverage to employees and their families," said Marcotte. 

Fueling the overall growth in the cost of health benefits is the surge in spending on pharmaceuticals, and specialty drugs, in particular. For the first time in the survey, most employers now consider specialty pharmacy the highest driver of health costs and are taking steps to curb them. According to the survey, nearly a third of respondents (31%) indicated specialty pharmacy was the highest driver of health costs. That compares with only 6% who cited specialty pharmacy as the number one driver in 2014. Overall, 80% of employers placed specialty pharmacy as one of the top three highest cost drivers, followed by high cost claimants (73%) and specific diseases and conditions (61%). 

No major changes for employees during open enrollment
This year's open enrollment season will bring no major changes for many employees. Consistent with this year, employees should expect about a 5% increase in premium contributions and minimal changes to their plan design. 

"Employers' focus in 2017 is shifting away from plan design to optimizing how health care is accessed and delivered. That translates into expanded telehealth services, more Centers of Excellence options and optional selective network choices that focus on providing higher quality health care," said Marcotte. 

Based on the survey, here is what else employees can expect during open enrollment:

• Telehealth services on the rise: Nine in 10 employers (90%) will make telehealth services available to employees in states where it is allowed next year, a sharp increase from 70% this year. By 2020, virtually all large employer respondents will offer telemedicine. Utilization by employees remains low, but is increasing steadily.
• Consumer-Directed Health Plans (CDHPs) increase slightly: Overall, 84% of employers will offer a CDHP in 2017, up from 83% this year. In addition, more than one-third of employers (35%) will only offer CDHPs to employees in 2017, a slight increase from 33% this year. 
• Spousal surcharges leveling off: One in three employers (33%) will have surcharges in place for spouses who can obtain coverage through their own employer, roughly the same as this year. A few employers will exclude spouses when other coverage is available through an employer.
• Expanded options at Centers of Excellence grow. The use of Centers of Excellence will grow from 79% this year to 85% in 2017. The largest increases will be for bariatric surgery (up 15 percentage points), transplants and fertility treatments, both up 8 percentage points.
• Tools to manage care: Eight in 10 respondents (80%) plan to offer nurse coaching for care and condition management while 72% will offer nurse coaching for lifestyle management. Nearly two-thirds (65%) will provide employees with self-service decision-making tools to help them become better health care consumers.

About the Survey
The Large Employers' 2017 Health Plan Design Survey was conducted between May and June 2016. A total of 133 large employers participated in the survey. Collectively, respondents represent a wide range of industry sectors and offer coverage to more than 15 million employees and their dependents.

About the National Business Group on Health®
The National Business Group on Health is the nation's only non-profit organization devoted exclusively to representing large employers' perspective on national health policy issues and helping companies optimize business performance through health improvement, innovation and health care management. The Business Group leads initiatives to address the most relevant health care issues facing employers today and enables human resource and benefit leaders to learn, share and leverage best practices from the most progressive companies. Business Group members, which include 72 Fortune 100 companies, provide health coverage for more than 50 million U.S. workers, retirees and their families. For more information, visit www.businessgrouphealth.org.