Era of low health care cost growth continues

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in Employee Benefits Program,Human Resources

The cost of providing employer-sponsored health care benefits is expected to increase 4.4% this year, a slight uptick from 2013, when cost increases fell to a 15-year low, according to an annual survey by Towers Watson and the National Business Group on Health, an association of large employers.

The survey of 595 large U.S. employers also found that a large majority of employers remain committed to providing health benefits to active employees, but say changes to their plans are inevitable in coming years.

The Employer Survey on Purchasing Value in Health Care found that employer costs are expected to reach $9,560 per employee in 2014, $403 more than employers paid on average  in 2013. Last year, health costs grew just 4.1%, the lowest rate since 1998.

Employers continue to shift costs to employees. The survey found that employees’ 2014 share of premiums increased nearly 7%, to $2,975. Out-of-pocket costs also increased.

The total employee cost share has climbed from 34.4% in 2011 to 37% in 2014. Employees now pay over $100 more each month for health care than they did just three years ago.

“Despite the moderation, health care costs continue to outpace inflation and remain a major concern for U.S. employers,” said Ron Fontanetta, senior health care consultant for Towers Watson. Employers will continue to look for ways to manage their health care costs, and “many employers are focusing on reshaping their health strategy for the next three to five years,” he said.

Almost all respondents (95%) said subsidizing health benefits is a very important part of their rewards package. However, 92% expect to make moderate to significant changes to their programs by 2018.

Strategies employers said they will try: More use of health savings accounts and other account-based health plans (75%) and higher employee contributions for dependent coverage (49%). Two-thirds said they plan to explore private insurance exchanges.

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