American employers expect a 4.1% rate of increase in the cost of employer-sponsored healthcare benefits in 2015—the lowest in 15 years but well above inflation.
The findings of the 20th annual Towers Watson/National Business Group on Health (NBGH) Best Practices in Health Care Employer Survey also point to a growing affordability challenge for employees, especially for lower-wage workers.
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Healthcare costs for 2015 are expected to average $12,041 per employee, up from $11,567 in 2014. On average, employees will pay 22.2% of total premium costs in 2015, which in payroll deductions translates into an average employee contribution of $2,676, or $223 a month.
Against the backdrop of sluggish economic growth and low inflation, employers continue to aggressively manage their health benefit plans to rein in costs,” says Randall K. Abbott, a North American leader and senior strategist in Towers Watson’s health and group benefits practice.
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“By and large, employers have done a good job managing costs in recent years,” he adds. “Despite this success, the Affordable Care Act’s excise tax looms ahead in 2018, and four out of five employers now identify changes to health and pharmacy plan designs as their most important strategic priority.”
Employer actions taken and planned include:
- curbing the high cost of specialty pharmacy through new coverage/utilization restrictions: 53% of employers have done so already; another 32% are likely to by 2018;
- adopting spousal surcharges: 27% of employers have implemented; could rise to nearly 60% in three years;
- using a defined contribution strategy instead of defined benefit: 20% today; expected to double by 2018; and
- offering more customization by adding voluntary benefits: 34% today; could reach 70% by 2018.
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“While we have experienced several years of slower growth in health care trend, health care cost increases are still multiples of CPI,” says Brian Marcotte, president and CEO of the NBGH. “Employers are trying to balance offering valuable benefits that meet employees’ needs with the looming excise tax, which makes it imperative that they focus on areas where there are opportunities to make changes while preserving quality and effectiveness.”
The survey was completed by 487 employers in June and July 2015. Respondents collectively employ 15.1 million full-time employees, have 12 million employees enrolled in their healthcare programs and represent all major industry sectors.