Stephen Miller reports in SHRM that US health care costs are expected to grow at a historically low rate of 7.5 percent in 2013, the fourth year of relatively flat growth. This is the conclusion of Pricewaterhouse Cooper’s (PwC) Behind the Numbers report.

The net impact for employers could be as an increase as low as 5.5% after accounting for changes in benefit design by purchasers.

3 Cost Growth Containers

A pattern of slower medical growth reflects three major factors:

  • Employers’ efforts to hold down expenses.
  • Lower use of services by cost-conscious patients.
  • The sluggish economy.

4 Deflators

The research indicates that four forces will continue to slow the rise in medical cost trend in 2013, acting as “deflators”:

  • Medical supply and equipment costs are abating under market pressure.
  • New delivery methods for primary care are gaining popularity.
  • Price transparency is exerting downward pressure.
  • The pharmaceutical patent cliff continues to increase use of cost saving generic drugs

2 Inflators

Two factors will nudge medical cost trend upward next year:

  • Patient utilization is expected to rise as the economy strengthens.
  • Medical advances are driving growth in high-cost care and catastrophic claims.

Employer Cost-Control Strategies

According to a report on PwC’s 2012 Health and Well-Being Touchstone Survey of 1,400 U.S. employers of all sizes, across a broad range of industries, employers are focused on two primary strategies to control medical costs in 2013:

  • Expanding wellness programs.
  • Increasing employees’ share of costs,

Wellness programs are offered by 72% of employers in 2012. Half of them said they are considering expanding their programs in 2013.

The most common offerings include:

  • Employee assistance programs (provided by 84% who offer wellness programs).
  • Health risk assessments (80%).
  • Biometric screenings (71%).
  • Tobacco cessation (67%).
  • Weight management (56%).

Disease management programs are offered by 58% of employers in 2012.

The most common are related to:

  • Diabetes (6%).
  • Cardiac disease (56%).
  • Asthma (54%).
  • Cancer (39%).

Plan design features with the most significant changes in 2012 include considerable increases in:

  • In-network deductibles.
  • Emergency room co-pays.
  • Prescription drug co-pays
Under consideration: Findings show that employers are considering these cost containment measures:
  • 57%: increasing employee contributions to health plans.
  • 50%: increasing cost sharing through plan design, such as higher deductibles.
  • More than 50%: raising employee prescription drug plan costs.
Other measures employers are already taking include:
  • 40%: a high-deductible plan with HSA, up from 38% percent in 2011
  • 17%: high-deductible plan with a health reimbursement arrangement (HRA), down from 19% in 2011.
  • 4%: an HRA linked to a traditional heath plan.
Cost-Controlling Solutions

Already implemented

Under consideration

Not under consideration

Increase employee contributions.

31%

57%

12%

Increase prescription drug plan cost-sharing through plan design changes.

21%

52%

27%

Expand and improve wellness inside the U.S.

38%

50%

12%

Increase medical plan cost-sharing through plan design changes.

34%

50%

16%

Implement a value-based design.

6%

45%

49%

Implement a high-deductible plan as a full replacement option for medical benefits.

13%

42%

45%

Implement a performance-based network.

4%

41%

55%

Offer a health savings account.

33%

40%

27%

Implement a high-deductible plan as an additional medical plan option.

32%

40%

28%

Consolidate vendors.

15%

36%

49%

Expand/offer flexible work arrangement.

26%

32%

42%

Offer a health reimbursement arrangement.

21%

32%

47%

Source: PricewaterhouseCoopers, Health and Well-Being Touchstone Survey Results, May 2012.

Related Articles:

Typical Health Costs for American Family Now Exceed $20,000SHRM OnlineBenefits Discipline, May 2012

Study: CDHPs Could Save Billions in SpendingSHRM Online Benefits Discipline, May 2012

Unnecessary ER Visits Linked to Low Co-PaysSHRM Online Benefits Discipline, May 2012

Survey: Employers Controlling Costs with Wellness ProgramsSHRM OnlineBenefits Discipline, May 2012

Half of Employer Health Plans Have No In-Network DeductibleSHRM OnlineBenefits Discipline, April 2012

Screenings and Early Intervention Can Reduce Medical CostsSHRM OnlineBenefits Discipline, April 2012

Costs Vary Widely for ‘Shoppable’ ProceduresSHRM Online Benefits Discipline, March 2012

Applying Effective In-Network Incentives at CalPERSSHRM Online Benefits Discipline, March 2012

Behavioral Economics Improve Health DecisionsSHRM Online Benefits Discipline, January 2012

Stephen MillerCEBSis an online editor/manager for SHRM.

Consumer-Driven Decision: Weighing HSAs vs. HRAs

Quick Links:

SHRM Online Benefits Discipline

SHRM Online Health Care Reform Resource Page

Advertisements