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Mercer

Having made it through the first year under Employer Shared Responsibility requirements, you may be ready for a break from the subject of ACA compliance. As we discussed in an earlier post, in a recent survey of 644 employers, very few believed they would be liable for penalties for 2015. That’s the good news. But while it’s one thing to achieve compliance, it’s another to consider how best to get there.

 

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The deadline for ACA reporting to the IRS about coverage in 2015 was extended from March to June, and at this point most employers have a handle on their results. As reported in our recent survey – Living with Health Reform – virtually none of the nearly 650 survey respondents believe they will be liable for the “a” assessment – meaning they all offered coverage to substantially all employees working 30 or more hours per week. And just 8% thought they might be at risk for the “b” assessment – meaning that some of their employees might qualify for and obtain subsidized coverage on the exchange because their employer’s plan did not offer affordable contributions or meet minimum plan value requirements.

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Employers have made their opinion about the excise tax clear. There is another Affordable Care Act (ACA) provision, however, that irks them nearly as much: the employer mandate. In our recent survey of 644 employers, we asked employers what changes they would like to see made to the ACA. Repealing the excise tax was first, with 85% in favor, but repealing the employer mandate was second, favored by 70%. It’s not that employers don’t want to offer coverage; it's that proving they offer coverage is so much work.

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We’ve been tracking employer adoption of, and interest in, private health exchanges through Mercer’s National Survey of Employer-Sponsored Health Plans for the past few years. Currently 6% of large employers either use an exchange now or will implement one this year for 2017. That’s doubled from 3% using an exchange in 2014 – a strong rate of growth, even if the numbers are still small. Perhaps more telling, more than a fourth of large employers say they are considering moving to an exchange within five years.

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Every year when we tabulate our survey results, we eagerly dive into the results for jumbo employers (those with 20,000 or more employees) to identify and measure movement in the latest health benefit management trends. The jumbo employers have long been the pioneers driving health care innovation. They cover more people, so more at stake. They also tend to have more resources - people and financial - to devote to the cause. Their focus is not just cost, but also includes the other two components of the triple aim - quality and engagement. How do we know it works? Historically they have demonstrated lower rates of increase in health care cost than the overall averages and at the same time maintained richer benefits (lower deductibles, etc). But the real proof is in an analysis we do of 25 best practices across large employers in three areas – plan design, workforce health, and care delivery – where those in the top quartile for most best practices outperform those in the bottom quartile with about one percent lower trend.

 

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As we’ve reported, consumer-directed health plans have mushroomed during the health reform era. In 2015, exactly half of all large employers (those with 500 or more employees) offered a CDHP eligible for a health savings account -- yet only 5% offered it as the sole plan available to employees at their largest worksite. Still, many employers are at least thinking about a full-replacement strategy. 

 

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It was nice while it lasted. The average annual increase in prescription drug benefit cost jumped up to 8% in 2015 after five years of hovering around 5%–6%. Many employers remember the long period of double-digit drug cost increases in the late 1990s and early 2000s. We’re not back to that point yet, but we’re heading in that direction.

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While Mercer’s surveys have consistently shown that large employers remain committed to offering health coverage, in the early days of health reform, sizable numbers of small employers thought it was likely that they would drop their plans and send employees to the public exchange. In 2013, 21% of employers with 50-499 employees said they were likely to drop their plans within the next five years; this number fell to 15% in 2014 and to just 7% this past year. Among employers with 500 or more employees, just 5% say they are likely to drop their plans, essentially unchanged from 4% in 2014. Even back in 2010, when there was greater concern that new health plan requirements under the ACA would drive up cost, just 6% of large employers said they were likely to terminate their plans within five years.

 

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Employers are moving quickly to implement telemedicine services -- telephonic or video access to providers -- as a low-cost, convenient alternative to an office visit for some types of non-acute care. According to Mercer's 2015 National Survey of Employer-Sponsored Health Plans, offerings of telemedicine services jumped from 18% to 30% of all large employers in 2015. And, since an additional 35% said they were considering it, another big increase is likely this year. Among the nation’s largest employers -- those with 20,000 or more employees -- 44% already offered telehealth services in 2015.

 

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Last week the Centers for Medicare and Medicaid Services (CMS) released a report on U.S. health care expenditures in 2014. The big news was that total spending rose 5.3%, ending a multiyear trend of sharply smaller cost increases -- a 2.9% rise in 2013 and an average annual increase of 3.7% from 2009 through 2013. The national tab surpassed $3 trillion, a number most of us can’t comprehend, but it works out to about $9,500 per person.

 

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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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