Rates Expected to Climb 4% in 2017 as Workers Grow Weary of Cost-shifting
A new survey by Mercer Human Resources has found that average premiums for group health plans should
increase by about 4% for 2017 after employers make plan changes like increasing deductibles and switching carriers. Employers have enjoyed health plan cost increases of about 4% or less each year since 2011. Prior to that, essentially before the Affordable Care Act became law, costs were increasing by double-digit percentages for many years. The new findings come after the Kaiser Family Foundation and Health Research & Educational Trust released its own employer health benefits survey, which found similar increases for this year. Premiums for single and family coverage increased on average by about 3% in 2016, an amount that is one of the lowest on record, the survey found. The average family premium, which includes the amount contributed by both the employer and the employee, was $18,142 in 2016. Individual employer coverage cost an average of $6,435 in total. The projected underlying cost growth from 2016 to 2017 is at a new low of just 5.5%, Mercer noted. That’s the increase employers would expect if they made no changes to their medical plans. The difference between the underlying cost growth and actual cost growth reflects how much employers are shifting costs via higher deductibles or out-of-pocket expenses, or reducing the value of their health plans by offering plans with narrower networkers, for example. A difference of just 1.5 percentage points for 2017 suggests employers do not plan to do much cost-shifting in 2017. For the past eight years, the difference has been approximately 3 percentage points, and has not been less than 2 points. For the most part, employers have been able to keep cost increases low by pushing plans that have higher deductibles and out-of-pocket expenses for employees. Another way that employers have been reducing their costs is to offer HMO plans with narrow hospital and doctor networks, which require enrollees to pay more out of pocket if they use providers outside the network. Are workers growing weary? But while the employers that have been pushing high-deductible plans and narrow network plans are reducing their own costs, it may be coming at a price. The Mercer survey found that many workers are starting to feel their employer-sponsored coverage has become less of a benefit and more like a way to shift out-of-pocket costs onto the backs of workers. Kaiser has reached an astounding conclusion about this. While the average worker’s earnings increased by 60% between 1999 and 2016, their premiums in employer-sponsored plans soared 240% over the same period. In addition to those premium increases, the amount they paid out of pocket for health care services also jumped to a similar degree, Kaiser found. Deductibles in employer-sponsored health plans started their steep climb in 2008, before the ACA was enacted. Between 2008 and 2016, the average annual deductible doubled to $1,478 from $735. Deductible amounts also vary depending on employer size. For example, staff in companies with fewer than 200 employees had average deductibles of $2,000 this year, Kaiser found. What employers want to see Mercer asked employers that it surveyed what they would like to see changed about the ACA: • 80% said they would like to see the excise tax (also known as the Cadillac tax) eliminated (the tax of 40% on premiums above a certain threshold has already been delayed until 2020). • 61% want to eliminate the employer mandate that requires firms with 50 or more employees to offer health coverage or pay a penalty. • 47% want to repeal and replace the ACA entirely. One bright note was that only 2% of large employers (those with 500 or more workers) and 9% of those with less than 500 would prefer to send their employees to public exchanges to buy coverage. That’s compared with 2010, when 6% of large employers and 20% of small employers said it was likely they would terminate their plans.
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How Three Companies Reduced Their Workers’ Comp Costs
We’ve told you often in these pages about various workplace safety and claims management techniques,
but sometimes it’s good to learn from the first-hand experiences of other employers. The National Underwriter insurance trade publication recently profiled three companies that had reduced their workers’ comp costs using a combination of claims management and safety initiatives. You can use their experience to apply similar programs at your company. SMS Holdings’ experience This housekeeping and maintenance service provider did not roll out a one-size-fits-all approach to safety at is multiple locations in 46 states. The company instead took a silo approach to improving safety by having its front line staff and their supervisors come up with programs to enhance safety at each work site. It created safety committees at each of its locations that hold pre-shift safety huddles. Site managers also host weekly safety talks with employees that address hazards that are unique to the location, near misses or more general safety rules. The company also started a safety-tracking program that provides a forum for managers to exchange ideas on how injuries could have been prevented. SMS Holdings revised its injury reporting system, standardized claims instructions and forms and provided a claims checklist for its managers. Also, the company provides injured workers with a packet that outlines the process for handling their workers’ comp claim and includes all the forms and contact information they need. The company says its claims litigation rate fell to 11% of all claims in 2015, from 18% in 2014 since implementing the changes. The number of claims dropped more than 14%, and claims that required lost time from work plunged 52% – all while the payroll has increased by 14%. Seaboard Foods LLC After noting a strong uptick in claims, this self-insured pork producer started working more closely with its third-party administrator, which handles its workers’ comp claims, to mine the company’s injury claims for data. Seaboard, a 5,000-employee company in a small Texas town with a local network of providers, doesn’t always include the required specialist. The company now ensures that every injured worker receives the appropriate specialized medical care right at the time of injury, even if that means that the employee see a specialist in another town. They can drive themselves and get reimbursed for mileage, but if they can’t, then the company arranges transportation. Seaboard also started looking for and contracting with new service providers – like physical therapy and pharmacy management firms – that could demonstrate through data how they are able to reduce costs. Finally, the company started holding quarterly meetings with its senior leadership, workers’ comp team, third-party administrator and workers’ compensation attorney to review claims. They set goals and objectives for closing claims as early as possible and identifying particular claims that the company would try to close prior to the next quarter. To address injuries sustained in the cutting and packing lines, the company started conducting job-demand analyses to identify how employees get hurt doing certain tasks, and then evaluating workers to make sure they are fit for the work they’ve been assigned. Finally, it started a “work conditioning program” that helps workers get their bodies in shape to deal with the physical demands of repetitive motions they encounter in the workplace. All of this has paid off, and between 2012 and 2015 reduced Seaboard’s annual claims numbers by 46%. In addition, claims costs dropped 69% in that period. Stater Bros. Markets This supermarket chain started a new program focused on education and injury prevention for all of its employees, be they cashiers at its 168 stores or workers at its 2-million acre warehouse and distribution center in San Bernardino, Calif. Some changes were small, like requiring all employees who use knives to wear a chain-link metal mesh glove on the hand opposite the one wielding the knife. This reduced cutting injuries from an average of 200 a year to none. The company reviewed all of the clinics its injured workers are sent to, identifying and selecting facilities based on level of customer service and cleanliness. The company also started a training regimen that rotates from store to store to train staff and low-level managers on injury prevention, focusing mainly on avoiding sprains and strains – the most common injuries in its stores. For its warehouse employees, Stater introduced a program called “Ice Pack” in which physical therapists are available onsite at its corporate campus to help employees with taping, wrapping and icing parts of the body to help them do their jobs more efficiently or recover after a shift. Finally, to address rising prescription drug expenses, it conducted a claims review to identify problematic prescription patterns. It met with the health care providers its employees use and worked with pain-management doctors to find alternatives to prescribing so many drugs, which employees often are not taking. Since it started this program, Stater has reduced its prescription drug costs by $1 million over two years. Find a plan that meets your budget You can use Medicare’s plan-finder tool at Medicare.gov to evaluate the plans available to you. Here are the areas you should consider when looking for a plan that you can afford: • The cost of the premium. • What are the co-pays, and which drugs are covered – and at what cost. • Find a plan that includes your preferred doctors and pharmacy. If you find that your current coverage still meets your needs, then you’re done. If not, you’ll need to evaluate which one you can afford while ensuring it meets your needs. Medicare or Medicare Advantage? If you collect benefits from Social Security, you will automatically get Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance). Remember: There is a premium for Part B. If you are covered through active employment or by your spouse’s insurance, you must follow the directions when you get your Medicare card indicating you don’t want it. If you are going with original Medicare, you have the option of adding Part D prescription drug coverage, which will better control your medicine expenses. Or choose a Medicare Advantage (Medicare Part C) plan that bundles original Medicare with extra benefits and may include prescription drug coverage in one plan. Medicare Advantage is akin to an HMO or PPO and you will have to see doctors that are in the insurer’s network or pay higher co-pays if you go outside the network. Understand deadlines If you miss the enrollment deadline, you may have to wait until next year before you make changes. However, there is a second enrollment period – from Jan. 1 to Feb. 14, 2017 – during which you can drop a Medicare Advantage plan and switch to original Medicare. If you do, you can also sign up for Part D prescription drug coverage.