Upstate New York employers, responding to a recent survey, estimate that their health-benefit cost-per-employee would rise 6.6 percent in 2017, if they made no changes to their current plan.

However, they expect to hold their cost increase to 5.3 percent by making key changes to their plans.

“Those could be plan-design changes … [an] increase in deductibles, increase in co-pays,” says Lynne Allen, consultant with Mercer, who spoke to CNYBJ on Nov. 29.

The findings are part of the “National Survey of Employer-Sponsored Health Plans” that Mercer, a health-care consulting firm, conducts annually.

It included the responses of 80 upstate New York and western Pennsylvania employers, although “most” of those responses were from upstate employers, according to Allen.

Besides plan-design changes, Allen says the findings indicate a continued increase in the offering of high-deductible health plans.

“We’re seeing that much more frequently today because what we do find is that employees who enroll in high-deductible health plans do spend less on health care,” says Allen.

Plan members with high-deductible health plans are more likely to look for generic drugs, she adds.

They’re also more likely to go to an urgent-care facility or use telemedicine, instead of visiting an emergency room because they’re going to have a higher, out-of-pocket cost up-front until they meet their deductibles.

“So we do see a change in the actual utilization of the benefits,” notes Allen.

Other findings
Among the 80 regional respondents, the Mercer survey found the total health-benefit cost for active employees increased 2.8 percent in 2016, to an average of $11,816 per employee.

The survey also found that 54 percent of responding employers offered a high-deductible consumer-driven health plan (CDHP) with an account feature such as a health savings account (HSA) in 2016.

Of those employers sponsoring an HSA-eligible CDHP, 56 percent make a contribution to their employees’ accounts.

The survey also found that 66 percent of all employees covered in respondents’ health plans are enrolled in a PPO/POS (preferred-provider organization / point of service) plan, 9 percent in HMOs (health-maintenance organizations), and 26 percent in CDHPs. The median PPO deductible is $500.

The average employee-contribution amount for employee-only coverage is $138 monthly for a PPO/POS plan, $159 monthly for an HMO, and $78 monthly for an HSA-eligible CDHP.

National view
Employers nationwide predict that their total health benefit cost per employee will rise by 4.1 percent on average in 2017. The increase reflects changes they will make to hold down cost, such as switching carriers, adding a CDHP, or changing plan design.

If they made no changes to their current plans, they estimate that cost would rise by an average of 6.3 percent. 

“Last year, preparing for 2016, employers were still doing whatever they had to do to avoid incurring the excise tax,” Tracy Watts, Mercer’s leader for health-care reform, said in the news release. “But with the delay in implementation to 2020, employers have some breathing room to work on strategies that are less about shifting cost and more about improving the system for the long-term. For example, many employers are getting creative with provider networks and new reimbursement schemes. The market has taken baby steps in that direction, but so far there’s relatively little money at stake for providers based on outcomes. We want to change that.”

The excise tax, or what is known as the so-called Cadillac tax under the Affordable Care Act (Obamacare), is a 40 percent tax on high-end plans above $10,200 for individuals and $27,500 for family coverage.

Mercer estimates that 21 percent of all employers with 50 or more employees (and 31 percent of large employers) currently offer a plan whose cost would exceed what is likely to be the excise tax threshold in 2020, assuming they made no changes to the plan before then.

Survey methodology 
Mercer conducts the National Survey of Employer-Sponsored Health Plans using a national probability sample of public and private employers with at least 10 employees. In all, 2,544 employers completed the survey in 2016. 

Researchers conducted the survey during the summer, when most employers have a “good fix” on their costs for the current year.

Results represent about 600,000 employers and nearly 100 million full- and part-time employees, with an error range of plus or minus 3 percent.

About Mercer
Mercer is a global human resources and employee benefits consulting firm. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries.

Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global insurance services and consulting firm.

Contact Reinhardt at ereinhardt@cnybj.com