Dive Brief:
- Early responses from a major Mercer survey still in the field show employers predicting that health benefit cost per employee will rise by 4.2% on average in 2016 after they make planned changes such as raising deductibles or switching carriers. This is consistent with actual cost growth in 2014 (3.9%) and the expected cost growth for 2015.
- Mercer reports that what is what is most surprising – and "encouraging" – is the slowdown in the underlying cost growth, the increase employers would expect if they made no changes to their medical plans.
- Employers surveyed said cost would rise by an average of 6.4% in 2016 if they made no changes. That’s down from 7.1% for 2015 and is the lowest rate of underlying cost growth seen since Mercer began collecting this information in 2005, when employers said cost would rise 10% if they made no changes (after changes, the actual average increase was just 6.1%).
Dive Insight:
Despite the slowed cost trend, more than half of the survey respondents (54%) plan to make some changes to their programs in 2016. Tracy Watts, Mercer’s National Health Reform Leader, notes that employers are well aware that the ACA’s excise tax (Cadillac tax) on high-cost plans is slated to go into effect in 2018, even as calls for reform or repeal are mounting.
Mercer has estimated, based on plan cost reported in 2014, that about a third of all employers (31%) were on track to reach the excise tax threshold. One fourth (25%) of survey respondents say they are considering adding a CDHP or taking steps to increase enrollment in an existing CDHP specifically to help avoid the tax –on top of the 41% that have already done so. A whopping 42% of respondents say they are considering adding or expanding programs to improve employee health and well-being – specifically as a way to avoid the excise tax.
“It may be tough to measure, but a lot of employers believe investments in programs to improve employee health have paid off in medical plan savings,” says Beth Umland, Mercer’s Director of Research for Health and Benefits. “While there are many opinions about why we’re seeing a slow-down in benefit cost growth nationally, efforts to educate, engage and support employees in improving their health should make every employers’ to-do list.”
