🔒Employers focus on health care cost shifts, wellness

Q&A talks about changes in employer health benefits with Silas M. Warner, client advocate/vice president of Willis Group's human capital practice in Hartford.

Q: What trends, cost and otherwise, are you seeing with employee-benefit programs?

A: Medical cost trend continues to increase at a pace of about 9 percent. Pharmacy cost trend is even higher at 12 percent or more due to the high cost of specialty drugs. These increased costs are forcing employers to adjust either the value of the medical insurance product or to adjust the employer/employee contribution model. Whether it's through a traditional enrollment process or a private-exchange, more employers are offering benefit programs that include core and voluntary benefits.

Employers are also starting to view the Cadillac Tax — a component of the Affordable Care Act that is set to go into effect in 2018 — as a factor in their medical-plan strategy. The Cadillac Tax is gaining attention on Capitol Hill as policymakers recognize that the tax could significantly impact a larger number of employers than originally anticipated due to the continued escalation of healthcare costs.

Another trend that ties into cost and overall productivity involves employer-sponsored wellness programs. The industry is moving from a return-on-investment focus to a value-on-investment focus.

Q: In 2014, the Society for Human Resource Management said the number of employers that only offer a consumer-directed health plan (CDHP) was expected to surge by nearly 50 percent in 2015. Did that happen?

A: There has definitely been an increased focus on consumer-directed health plans and we expect that trend to continue. CDHPs are designed to engage the member to take greater control of their healthcare and shopping decisions. According to the National Business Group on Health Large Employers 2016 Health Plan Design survey, 83 percent of large employers offer at least one CDHP. In addition, a third of respondents will offer only CDHPs in 2016.

Q: Wellness programs have been a focus of large employers for a number of years. Have small and medium-sized businesses adopted them as well?

A: We've found mid-size to large employers are more likely to have resources in place to manage a program or to hire a third-party wellness vendor. However, small and mid-size employers without dedicated staff are now also offering wellness programs in much greater numbers.

According to the Willis 2015 Health and Productivity Survey, 55.4 percent of employers with less than 250 employees offer wellness programs and 14.1 percent plan to offer them. For larger companies the numbers are higher. Regardless of size, many employers are including incentives for various participatory behaviors such as tobacco/non-tobacco usage, biometric testing and health-risk assessments. Some are offering outcomes-based incentives for biometric numbers (blood pressure, glucose, cholesterol) and BMI.

Q: How do employers view the compliance rate in their wellness programs?

A: Using the 2015 Willis Health and Productivity Survey results again, 78.1 percent of employers with less than 250 employees said they were satisfied with participation levels and 68.6 percent said they were satisfied with the business impact of their wellness programs.

Results also show 87.3 percent of employers with 250-500 employees said they were satisfied with participation levels and the identical number, 68.6 percent, said they were satisfied with the business impact of their wellness programs.

The reality is that the higher the dollar value for the incentive, the more likely the employer is to see compliance.