Executive Perspectives

P.O. Box 838

2-4 Main Street
Peterborough, NH 03458
Toll Free: 800-258-5318 Phone: 603-924-9449 Fax: 603-924-4490

Satisfaction Gap Narrowing

Between Traditional and
Consumer-Driven Health
Plans

hos happier with their health plan those in traditional managed care
plans, or those in so-called consumer
- driven and high-deductible plans?

The latest data from the nonpartisan Employee

Benefit Research Institute (EBRI) show that the
overall satisfaction rate among consumer-driven
health plan (CDHP) enrollees is gradually
increasing, while it is gradually decreasing among
traditional enrollees.
Nevertheless, significantly more people in traditional
plans are satisfied with their health coverage than
are those in the newer types, and out-of-pocket
costs may explain some of the variation in overall
satisfaction rates. In 2013, 44 percent of traditionalplan participants were extremely or very satisfied
with out-of-pocket costs (for health care services
other than for prescription drugs), while 20 percent
of high-deductible health plan (HDHP) enrollees and
31 percent of CDHP participants were extremely or
very satisfied. Satisfaction has been trending
upward among CDHP enrollees in recent years.
As in previous years of the survey, in 2013
individuals in a CDHP or an HDHP were found to be
less likely than those in a traditional plan both to
recommend their health plan to friends or
co-workers, and to stay with their current health plan
if they had the opportunity to switch plans, said
Paul Fronstin, director of EBRIs Health Research

DECEMBER 2014:

Satisfaction Gap Narrowing Between

Traditional and Consumer-Driven Health
Plans

Employers Scaling Back Health Coverage

for Spouses and Dependents

Analysis Shows Upward Trend in U.S.

Health Care Cost Increases

and Education Program. However, the percentage

of HDHP and CDHP enrollees reporting that they
would be extremely or very likely to recommend
their plan to friends or co-workers has been trending
upward, while it has been flat among individuals with
traditional coverage.
These latest findings come from the 2013 EBRI /
Greenwald & Associates Consumer Engagement in
Health Care Survey (CEHCS), compared with the
2005 2007 EBRI / Commonwealth Fund
Consumerism in Health Care surveys, and the 2008
2012 CEHCS.
Among the EBRI reports other findings:

Overall Satisfaction Rates: Very few traditional

-plan enrollees were not too or not at all satisfied
with their health plan in any year of the survey.
In 2013, only 11 percent of traditional-plan
enrollees were not too or not at all satisfied with
their health plan. In comparison, 22 percent of
HDHP and 19 percent of CDHP enrollees
reported that they were not too or not at all
satisfied with their health plan. Overall,
dissatisfaction among CDHP and HDHP

This newsletter is for informational purposes only and should not be considered as legal advice.

AWANE

December 2014

enrollees has been trending downward during

the survey period.

Quality of Care: Other than in 2006, individuals

in a CDHP were as satisfied as individuals with
traditional coverage with the quality of care
received. By 2013, about two-thirds of
individuals whether in a CDHP (67 percent) or
with traditional coverage (68 percent) were
extremely or very satisfied with the quality of
care received.

In contrast, individuals with an HDHP were less

likely to be satisfied with the quality of care received
than those in a traditional plan in every year of the
survey. By 2013, 61 percent of HDHP enrollees
were extremely or very satisfied with quality of care
received, compared with 68 percent among
traditional plan enrollees. Satisfaction with quality of
care fell between 2012 and 2013 for both individuals
with a CDHP and those with traditional coverage.
________________________________________

Employers Scaling Back

Health Coverage for Spouses
and Dependents

o better control rising health care costs and

minimize the risk of triggering the Patient
Protection and Affordable Care Acts excise
tax, over the next three years, a growing
number of employers will make significant changes
in how they subsidize health care coverage for their
employees spouses and dependents. This is
according to survey data from global professional
services company Towers.

coverage is available elsewhere.

Health care coverage for spouses and dependents
is a charged topic, said Randall Abbott, a senior
consultant for Towers Watson. Historically, virtually
all large employers have offered and subsidized it,
but its expensive. As employers seek to manage
their expenditures, a growing number are rethinking
their willingness to cover a working spouse who has
a health benefit option elsewhere. The emphasis
has been on increasing employee contributions or
introducing surcharges, with a small percentage of
employers actually excluding working spouses from
coverage altogether.
Results from an earlier survey, the 19th Annual
Towers Watson / National Business Group on
Health Employer Survey on Purchasing Value in
Health Care, provide more insight into the specific
actions employers are already taking. The survey
shows that in 2014:

Results from the 2014 Towers Watson Health Care

Changes Ahead Survey, show that by 2017, 63% of
employers will add surcharges or exclude spouses
from coverage when employer-sponsored health

As employers seek to manage their

expenditures, a growing number are
rethinking their willingness to cover a
working spouse who has a health benefit
option elsewhere.

The Benefit Plan Watch

49% of employers increased employee

contributions for spouse and dependent
coverage at a faster rate than for individual
employee coverage.
24% implemented spouse coverage surcharges
in 2014 of about $100 per month or more when
other coverage was available to the spouse.
These surcharges increased the cost of spouse
coverage for employees by $1,200 a year, on
average, and at the high end, by more than
$2,000 a year.
2% offered no subsidy at all for spouse
coverage.

These subsidy changes and surcharge levies are

just some of the many changes employers continue
to make to control costs, said Abbott. The overall

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goal is to manage costs and derive greater value
for each dollar spent while also improving worker
health, quality of care and health outcomes. The
challenge for employers is that there is no single
solution; rather, they must look across all program
dimensions.
________________________________________

Analysis Shows Upward

Trend in U.S. Health Care
Cost Increases

n 2014, U.S. companies and their employees

saw a slight uptick in the rate of U.S. health care
cost increases, according to an analysis by Aon
Hewitt. After plan design changes and vendor
negotiations, the average health care premium rate
increase for mid-size and large companies in 2014
was 4.4 percent, up from 3.3 percent in 2013. In
2015, Aon Hewitt projects average health care premium increases will be 5.5 percent after plan design
changes and vendor negotiations.
Aon Hewitt's analysis showed the average health
care cost per employee in 2014 was$10,717, up
from $10,266 in 2013. The portion of the total health
care premium that employees were asked to
contribute toward this premium cost was $2,487 in
2014, compared to $2,355in 2013. Meanwhile,
average employee out-of-pocket costs, such as
copayments,
coinsurance
and
deductibles,
increased from$2,005 in 2013 to $2,295 in 2014.

December 2014

For 2015, average health care costs are

projected to increase to $11,304 per
employee. Employees will be asked to
contribute 23.6 percent of the total
health care premium, which equates
to $2,664 for 2015.
2015. Average employee out-of-pocket costs are
expected to be $2,487. These projections mean that
over the last five years, employees' share of health
care costsincluding employee contributions and
out-of-pocket costs - will have increased more than
52 percent, from $3,389 in 2010 to $5,151 in
2015.
"Over the past few years, the overall economic
situation kept consumer spending on discretionary
items - including health care - down, and we
observed a lower rate of premium increases,"
said Tim Nimmer, chief health care actuary at Aon
Hewitt. "Now, with employment rates stabilizing,
individuals are feeling more secure about their
financial situation and have been willing to
re-engage in using the health care system. As these
utilization rates increase, we expect to see health
care cost increases follow."
Costs by Plan Type

For 2015, average health care costs are projected to

increase to $11,304 per employee. Employees will
be asked to contribute 23.6 percent of the total
health care premium, which equates to $2,664 for

*Projections
Costs are plan costs (premium or budget rate) on a
per employee basis. They include employee
contributions, but not their out-of-pocket costs (i.e.,
co-payments, coinsurance).
Employer Actions to Mitigate Trend - As the
health care landscape continues to evolve, recent
Aon Hewitt research indicates companies are
reducing costs by implementing a mix of traditional
and non-traditional approaches. This includes:

The Benefit Plan Watch

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December 2014
plan to adopt a number of pay-for-performance
strategies:

Using high-deductible health plans (HDHPs)

Aon Hewitt's research shows that HDHPs are the
second most popular plan choice offered by
companies, surpassing HMOs. Fifteen percent of
companies offer a HDHP as the only health plan
option today, and another 42 percent are
considering doing so in the next three-to-five years.
"Gating" health benefits - More than 60 percent of
companies plan to "gate" employees to richer
designs in the next three-to-five years. This strategy
requires employees to complete a "task" to access
richer design options. For example, companies may
offer a basic high-deductible plan to their entire
workforce, but make a richer PPO option available
to those employees who complete a health risk
questionnaire or biometric screening.
Managing dependent eligibility and subsidies
Aon Hewitt's research shows:

22 percent of companies have reduced

subsidies for covered dependents, while 18
percent added a surcharge for adult
dependents with access to other health
coverage. An additional half of companies are
exploring such approaches over the next few
years.
52 percent of companies are considering using
unitized pricing - where employees pay per
person and not individual versus family.
58 percent of companies have completed a
program audit of covered dependents to ensure
only those who are eligible will remain on the
plan.

24 percent of companies currently steer

participants (through plan design or lower cost)
to high quality hospitals or physicians for
specific procedures or conditions and another
56 percent are considering doing so in the next
three-to-five years.
18 percent use integrated delivery models such
as patient-centered medical homes to improve
primary care effectiveness, and another 56
percent plan to do so in the next three-to-five
years.
10 percent have adopted reference-based
pricing - where employers set a pricing cap on
benefits for certain medical services for which
wide cost variation exists with no discernible
differentiation in quality. Another 58 percent
plan to do so in the next three-to-five years.

Exploring new ways to select and purchase

health care benefits Private health exchanges
are
becoming
increasingly
attractive
to
organizations that want to offer employees
expanded choice of plans and insurance
companies while lowering future cost trends and
lessening the administrative burden associated with
sponsoring a health plan. In this model, companies
continue to sponsor and subsidize health insurance,
but allow employees to choose from multiple group
plan options and insurance carriers via a
competitive, health insurance marketplace.
"Forward-thinking companies are not only looking
for near-term cost mitigation, they are using this
period of somewhat dampened health care cost
increases to accelerate the pace of change within
the health system," said Jim Winkler, chief
innovation officer of Health & Benefits at Aon
Hewitt. "As costs begin to rise, companies need to
be ahead of the game with a health program that
encourages
consumer
accountability
while
rewarding health care providers that deliver cost
effective, high-quality health outcomes."

Adopting pay-for-performance strategies An

increasing number of companies have adopted or

The Benefit Plan Watch

Page 4