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H E A LT H W E A LT H C A R E E R

S U R V E Y H I G H L I G H T S

Mercer.us/NationalSurvey

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MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS

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S U R V E Y C O S T T R E N D S

Drugs remain a key cost driver in health plans, in particular specialty drugs. Even though the specialty drug trend has cooled slightly since last year, it’s still in the double digits.

While mid-sized and large employers (those with 500 or more employees) were able to hold cost growth to 3.2%, smaller employers (10-499 employees) were hit with a substantially higher increase. Smaller employers tend to be fully insured and have fewer resources to devote to cost management.

But there is considerable variation in cost experience from one employer to the next across all size groups. Among all mid-sized and large employers, 27% had no increase at all, while 18% experienced increases of more than 10%. The smallest employers were the most likely to have had these very high increases. Very large employers – those with 20,000 or more employees – were better able to keep their cost increases moderate, but even in this group nearly one in ten had increases of more than 10%.

While employers are under pressure to achieve sustainable cost growth, they are also focused on providing a benefit package – and working experience – that will support an engaged and thriving workforce.

For the past several years, the survey has asked employers about their most important strategies for managing their health plans over the near-term. Monitoring and managing high cost claims was in the top spot in 2017 and 2018. Interestingly, “a focused strategy for creating a culture of health” has moved up from third to a strong second.

Health benefit cost growth remained moderate in 2018, at 3.6%. But with an increase of 4.4% projected for 2019, the trend is slowly moving upward – and it’s once again above CPI and workers’ earnings growth.

E M P L O Y E R S W I T H 5 0 0 + E M P L O Y E E S

P E R C E N T O F E M P L O Y E R S W I T H S P E C I F I E D C H A N G E I N T O TA L H E A LT H P L A N C O S T *

*Based on employers providing cost for both 2017 and 2018.

MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS

18%

31%

27%

24%

Cost increased more than 10% No change in

cost or costderease

Cost increased

by 5% or less

Cost increasedby 6-10%

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A FFO R DA B IL I T Y& C H O I C E

M A K I N G C O N S U M E R I S M W O R K F O R E V E R Y O N E

Over the past 10 years, employers raised PPO deductibles, implemented account-based consumer-directed health plans, and provided employees with financial incentives to take health assessments and biometric screenings, among other tactics.

For the segment of the working population that may have previously been over-insured, lower-cost CDHPs have worked well, especially for those who take advantage of the tax savings provided by HSAs. National employee enrollment in these plans has been slowly but steadily growing since 2006.

Given the substantial savings possible with CDHPs, specifically HSA-eligible CDHPs, compared to PPOs and HMOs – even PPOs with high deductibles – it may seem surprising that only 13% of large and mid-sized employers have moved to full replacement at their largest worksite. But data from Mercer Marketplace 365+ shows that employees are fairly evenly divided on how they want to pay their portion of insurance costs – some want smaller paycheck deductions and the risk of greater out-of-pocket cost, and others want to pay more for coverage and have less out-of-pocket cost exposure.

Consumerism strategies have played an important role in slowing health benefit cost growth in recent years.

AV E R A G E M E D I C A L P L A N C O S T P E R E M P L O Y E E

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Mercer believes that employers have a key role to play in transforming the healthcare marketplace into a more rational and efficient system. We’ve identified four “Vitals for Change” – areas where employers can work to maximize the quality and value of the healthcare that employees receive and reduce spending without shifting cost:

TO M A N A G E C O S T W I T H O U T S HIF T IN G C O S T

FU T U R E - FO C U S E D S T R AT E G IE S

Mercer partnered with the Catalyst for Payment Reform to create the Vitals for Change Scorecard, an inventory of actions that employers can take to optimize their health plans. Employers use the scorecard to assess their current state and understand where there are areas of opportunity within their benefit strategies.

LEARN MORE ABOUT THE SCORECARD HERE: HTTPS://WWW.MERCER.US/WHAT-WE-DO/HEALTH-AND-BENEFITS/EMPLOYER-HEALTHCARE-TRANSFORMATION.HTML

Examine emerging opportunities with an open mind.

Leverage data and technology to help employees make better healthcare decisions.

Align provider reimbursement with

value, not volume.

Deliver the right care at the right time, in the right

setting, error free.

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T HE R E S U LT S S H OW P R O G R E S S

25%STEER EMPLOYEES TO COE FOR TRANSPLANTS

High performance networks such as accountable care organizations typically include alternative forms of provider payment. To maximize the benefit of the high-performance networks, employers have to be willing to steer more employees to use them. About a fifth of all large and midsized employers now offer their employees an active choice of high-performance provider networks at open enrollment (not including those offering employees the choice of a fully-capitated HMO).

Employers are providing employees with access to Centers of Excellence for a growing number of complex services. They are most likely to require or incent employees to use a specific COE for transplants, where provider quality and experience is especially critical.

Telemedicine is one of the “new front doors” to health care. While most large and midsized employers now provide telemedicine, average utilization remains low, at 8% of eligible members. However, a Mercer analysis found that utilization is higher when the copay is lower – and among employers that offer telemedicine through a specialty vendor rather than the health plan.

80%

18%

OFFER TELEMED,UP FROM 18% IN 2014

OFFER EMPLOYEES A HIGH-PERFORMANCE NETWORK

Point solutions are the result of rapid advances in health technology — so-called because they are hyper-focused on a specific aspect of a member’s health experience. While they can add significant value, employers can feel challenged to evaluate and select the solutions that will most benefit their population.

Specialty pharmacies focus on high-cost, high touch medication therapy for patients with complex disease states and offer services above and beyond those typically offered at the retail level as part of their standard of care. About half of all large and midsized employers steer plan members requiring specialty drugs to specialty pharmacies. Among jumbo employers, nearly 80% do.

THE AVERAGE RISE OF PER-EMPLOYEE COST OF SPECIALTY DRUGS IN 2018

OFFER POINT SOLUTIONS

12%

56%

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Promoting workforce health is another way – some would say the best way – to manage cost without cost-shifting. In 2018, 39% of large and midsized employers said that their company vision or mission statement includes support for a healthy workplace culture.

That’s a very significant increase over last year, when just 23% had taken the step of making a public commitment to employee health and well-being.

Most employers have gotten the message that emotional and physical health are not only highly intertwined but are equally important to workforce productivity. They’re offering stress management, resiliency and mindfulness programs, and tele-therapy to make it easier for employees to get the mental healthcare they need. The importance of effective mental health and substance abuse care has never been more clear than now, as opioid addiction has reached epidemic proportions. More than half of employers have already taken steps to address substance abuse disorders in their workforces or say they are planning to.

Employers see building a culture of health as a top priority.

E M P L O Y E R S W I T H 5 0 0 O R M O R E E M P L O Y E E S

M O R E E M P L O Y E R S TA K I N G S T E P S T O B U I L D A “ C U LT U R E O F H E A LT H ”

C U LT U R E O F HE A LT H

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Leveraging best practices can impact cost trends.

Cost experience varies among employers, with some achieving flat costs and others getting slammed with double-digit increases. What makes the difference? As we know from our work with employers, it’s no one silver bullet, but rather a matter of doing many things right. Which strategies to use will depend on employee demographics and needs, specific trouble spots, corporate philosophy or A&R objectives, available resources and other factors. In 2018 we identified 27 strategies included in the survey that employers are using to manage cost and promote workforce health. We arrayed survey respondents based on how many of these strategies they used, from the fewest to the most, and then divided them into quartiles. Employers in the bottom group used seven or fewer best practices and those in the top group used 14 or more.

When we compared the average total health benefit cost increase for 2018 for each group, employers with more comprehensive strategies have notably lower cost increases.

This analysis doesn’t account for other factors influencing cost, such as local health care market conditions, and it doesn’t identify which practices yield the most savings. But it’s an encouraging finding that suggests that the hard work employers are doing to manage cost really does pay off. And as we move rapidly into the high-tech world of personalized medicine, consumer empowerment tools, nontraditional healthcare suppliers, marketplace consolidation across the supply chain, and alternative provider reimbursement and network strategies to reward quality and value, we have that many more tools to work with.

AV E R A G E C O S T I N C R E A S E B A S E D O N N U M B E R O F B E S T P R A C T I C E S U S E D

AV E R A G E I N C R E A S E I N T O TA L H E A LT H B E N E F I T C O S T I N 2 0 1 8 , A M O N G E M P L O Y E R S W I T H 5 0 0 O R M O R E E M P L O Y E E S

E MP LOY E R E FFO R T S M A K E A D IFFE R E N C E

Based on unweighted data.

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HE A LT H IN S I G H T S E R IE SThis year we are excited to offer you greater flexibility and convenience by expanding the number of opportunities to engage with the findings from our National Survey of

Employer-Sponsored Health Plans. These engagement points include in-person seminars and webinars. Each event is led by Mercer thought leaders and

offer a unique perspective tying back to our survey findings.

Join one of our upcoming events by visiting Mercer.us/Health-Insights

For more National Survey data and insights visit

Mercer.us/NationalSurvey

Join us at HLTH!

October 27-30, 2019Las Vegas, NV

Visit Mercer.us/HLTH for details, exclusive discounts and more.

W E ’R E LO O K IN G FO R IN N OVATO R S TO C H A N G E T HE FU T U R E O F HE A LT H!