Employers Requiring Workers to Pay More As Health Costs Continue to Rise, PwC Finds

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By Tawny Elgatian  

June 30 — Employers are shifting health plan costs to employees through increased contributions and plan design changes, a principal at PricewaterhouseCoopers said June 30, citing results of a survey by the firm.

“This year's survey results showed a stubborn frustration with rising health costs, but what surprised me is that employers are more typically using standard approaches for mitigating costs,” such as increasing contributions, Barbara Gniewek, a principal at PwC in New York, told Bloomberg BNA.

Even though the average annual increase in health-care costs, after plan changes are factored in, were lower than expected, employers are continuing to shift health plan costs to employees, according to the report, “Health and Well-Being Touchstone Survey results,” released June 24.

The increase in health care costs was 4.5 percent in 2013, compared with earlier projections of 5.4 percent. The expected annual increase for 2014 is 5.3 percent.

Some 38 percent of employers said they have increased employee cost sharing through medical plan design changes, and 47 percent said they are considering further hikes, the report said.

Various Approaches to Cost Mitigation

Employers indicated a number of strategies under consideration to mitigate cost increases over the next three years. Fifty-six percent said they are considering increasing employee contributions, 52 percent said they might further increase employee cost sharing in pharmacy benefit design and 49 percent indicated they are considering implementing or expanding their workplace wellness programs.

“Employers are still very invested in wellness, and some (between 20 and 30 percent) are considering expanding traditional wellness programs to well-being programs encompassing financial, social, community and career attributes,” Gniewek said.

“About half of employers are very likely to re-evaluate their overall benefits strategy in light of health reform,” the report said. According to the report, 44 percent of employers are considering high-deductible health plans (HDHPs) on a full-replacement basis to their current plans to alleviate costs and 18 percent already use HDHPs as the only medical plan option, the report said.

Employers also are considering other future strategies, such as implementing value-based designs (41 percent) or performance-based networks (34 percent of employers), or moving active employees to private exchanges (32 percent), the survey found.

Gniewek said the value-based designs and performance-based networks are “exciting ways to try and bend the cost curve by getting at the delivery system, and using private exchanges as a facilitator is a very interesting concept.”

The survey included about 1,200 employers in the U.S. in 35 industries.

To contact the reporter on this story: Tawny Elgatian in Washington at telgatian@bna.com

To contact the editor responsible for this story: Jo-el Meyer at jmeyer@bna.com

The survey results can be downloaded at http://www.pwc.com/us/en/hr-management/publications/health-well-being-touchstone-survey.jhtml.