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Mercer

Offerings of HSA-eligible high-deductible health plans have more than doubled in the past five years. Our 2016 National Survey of Employer-Sponsored Health Plans found that more than half of large employers (53%) now provide this type of plan to their employees, and nearly a quarter of employees (24%) are enrolled. At the same time, there has also been steady growth in offerings of onsite and near-site medical clinics, especially among the largest employers: About a third of employers with 5,000 or more employees provide a clinic for primary care services. An onsite clinic offers the maximum opportunity for control over quality, and more than half of the clinic sponsors in another Mercer survey said that their clinic is integrated with their population health efforts.

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In 2015, enrollment in consumer-directed health plans (CDHPs) reached a new milestone -- one-fourth of all covered employees. Mercer’s 2015 National Survey of Employer-Sponsored Health Plans found continued growth in both CDHP prevalence and enrollment rates. Growth has been fastest among large employers. More than half of employers with 500 or more employees now offer a CDHP (59%, up from 48%), and 28% of covered employees are enrolled.

 

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With this post, we at the blog are officially kicking off annual planning for 2018. Over the coming weeks, we’ll be offering advice and check lists for 2018, including some special to-do’s for prescription drugs and time-off benefits. We thought a good place to start this year is with a list of best practices. The list below contains 25 health benefit best practices from the Mercer National Survey of Employer-Sponsored Health Plans. Each year we compare the performance of employers that use the most of these best practices with those using the fewest (the top and bottom quartiles). And each year we find that those using the most best practices have lower average healthcare cost increases. (In 2016, the two groups had average increases of 3.8% and 4.8%, respectively.)

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Click here to see the full infographic

 

We’ve been tracking the growth of consumer-directed health plans in our national survey for years.  Now policymakers in Washington are signaling interest in liberalizing health savings account rules, intensifying the focus on high-deductible plans that would be eligible for an HSA. While the majority of large employers already offer CDHPs – among the largest they are nearly ubiquitous – most often they are offered as a choice, not as the only medical plan. Building enrollment in a CDHP offered as a choice has proven to be challenging, but it can be done. In this infographic, we present survey findings that should be of interest both to employers thinking about a full replacement strategy and to those committed to offering a CDHP as a choice but looking to encourage more employees who could benefit to make the move. 

 

 

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Employers implementing HSA-eligible consumer-directed health plans will almost certainly confront participant concerns about greater cost exposure from higher deductibles and other required cost-sharing features.  There are a number of creative approaches employers and participants can take to manage financial risk while leveraging the tax-preferred features of an HSA (or a health reimbursement account).  Participants can consider the following strategies:

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Consumer-directed health plans (CDHPs) have become a mainstream benefit offering. Spurred on by the need to avoid the excise tax, employers have added these low-cost plans at a fast clip over the past few years. In 2015, 29% of all employers – but 59% of those with 500 or more employees – offered an account-based CDHP, and a total of 25% of all covered employees were enrolled in one, according to Mercer’s National Survey of Employer-Sponsored Health Plans. Now more than a decade old, CDHPs were designed with the goal of holding down cost by encouraging cost-consciousness among consumers. The best CDHPs promote personal responsibility for maintaining or improving health and for choosing cost-effective, quality health care providers.  

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Critical illness coverage is becoming increasingly important as medical benefit offerings become leaner and enrollment in high-deductible health plans rises. Our National Survey of Employer-Sponsored Health Plans found that 45% of employers with 500 or more workers now offer critical illness coverage as a voluntary benefit for their employees. As Mercer’s Barry Schilmeister describes in this recent Kaiser Health News article, “More employers are looking at the reality of pulling back on the value of health plans but looking to offer something else that would make people feel a little more comfortable about taking on that additional risk.” Critical illness coverage, which typically provides a lump sum payment for certain diagnoses such as cancer, heart attack, stroke, kidney failure as well as major organ transplants, can help fill a coverage gap for employees.

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Last year saw the biggest one-year enrollment increase ever in account-based consumer-directed health plans – from 18% to 23% of all covered employees – as employers added plans at a rapid pace. All the growth is in plans with Health Savings Accounts – HSAs – and yet the other type of account, the Health Reimbursement Account, hasn’t gone away. About one in ten employers still offer an HRA, as they have for the past three years. In this informative article "HSAs Surge, Leaving HRAs in a Niche" in Managed Care Magazine (p.27), Mercer’s own Jay Savan explains the pros and cons of HRAs and why some employers prefer the doughnut to the bagel. 

 

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Here’s an interesting case study about a very large employer with a full-replacement high-deductible health plan this is helping employees manage health spending with targeted communications that proactively notify them (via email and texts) of opportunities to save on their most common health care purchases. A key focus of this program is encouraging greater use of the company’s existing onsite clinics and pharmacies. Good food for thought here, both for employers looking for ways to make a full-replacement strategy more employee-friendly, and for those with underutilized onsite clinics. Mercer’s survey, cited in the article, found that over a third of employers with 5,000 or more employees provide onsite clinics. For some, it may be time to reconsider how to use clinics more strategically in the post-reform world.

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Check out this article for tips on managing out-of-pocket expenses in a high-deductible health plan. Typically, your paycheck deductions are lower, which is a bonus, but how do you keep from falling behind financially when you need care? Here are the author’s suggestions, plus a few from me.

  • Take advantage of preventive services covered at 100%. For example, get a flu shot so you are less likely to get sick.
  • Use in-network providers for the lowest possible out-of-pocket expense.
  • Consult with a nurse for free by calling the nurse-line for a consultation before scheduling an appointment with a physician; it could save you the cost of an office visit
  • Many plans include a telemedicine benefit. The cost of a telemedicine visit is usually around $40-$50, and can be scheduled at your convenience via phone or video chat.
  • Investigate "convenience care” clinics in your area. Located in stores like Target, CVS, and Walgreens, they offer a limited number of services at a lower cost than urgent care or a physician office visit.  
  • When your doctor recommends a prescription drug, ask how much it costs and if there is an over-the-counter or generic option. Check a few different pharmacies for the best price. 
  • If a prescribed drug is very expensive and you have not used it before, ask whether you could have a smaller number of pills at first to be sure it works. Check to see if there are patient assistance programs to help defray the cost.
  • Shop around for services and tests. A variety of tools exist to support comparison shopping; check with your insurance company for help.
  • Some employers offer indemnity coverage -- policies that will pay a set dollar amount when you have an accident or are hospitalized. These low-cost coverages can provide peace of mind for those concerned about covering expenses before they meet their health plan’s high deductible.
  • If you’ve moved to the high-deductible plan from a more expensive plan, take the savings from lower paycheck deductions and deposit them (tax-free!) in a health savings account. That way you will have some money set aside to help pay for care before you meet the deductible. Many employers will help fund your HSA.  
  • Take advantage of any opportunities to earn dollars for your HSA by participating in healthy activities like biometric screenings. 

These are good suggestions to communicate to employees and their families. Even if you have provided similar guidance in the past, everyone can always use a refresher.

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More employees moving into lower-cost medical plans contributed to one of the smallest increases in total health benefit cost per employee in decades: 2016’s average increase of 2.4% is the lowest since 2013 and, before that, since 1997. According to Mercer’s survey, total health benefits cost averaged $11,920 per employee in 2016. This cost includes both employer and employee contributions for medical, dental and other health coverage, for all covered employees and dependents. Small employers (10-499 employees) again reported lower cost -- $11,271 -- compared to $12,288 for large employers with 500 employees or more. 

 

While many factors contributed to the low cost increase, including general inflation hovering around 1%, one that is drawing attention is the accelerating movement of employees into high-deductible consumer-directed health plans (see this article in the New York Times). CDHP enrollment has been rising for a decade and in 2016 jumped to 29% of all covered workers, up from 25% in 2015.

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A recent report from the Health Care Cost Institute (HCCI) found that people enrolled in high-deductible consumer-directed health plans have higher out-of-pocket healthcare expenditures than those in other types of medical plans, even though they use fewer medical services. The HCCI study examined claims from 2010-2014 for over 40 million individuals per year covered by employer-sponsored insurance. According to the study, out-of-pocket expenditures for people enrolled in CDHPs were 1.5 times greater than for those in traditional PPOs or HMOs, even though CDHP enrollees utilized roughly 10% fewer medical services per year. Neither the study groups nor the results were adjusted for member demographics, so it’s difficult to say that plan design accounted for all the difference in utilization. But it is interesting to note that while utilization was lower in all categories of medical services, the biggest differences were in the use of brand-name drugs and in ER use – two areas where overutilization is targeted by consumerism strategies.

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