Aon Hewitt Says Most Employers Will Keep Coverage In Place
Despite skyrocketing costs for both businesses and their employees to maintain healthcare insurance coverage, both parties are expected to shell out ever-increasing amounts to keep it in place, according to a new survey by Illinois-based employee benefits consulting firm Aon Hewitt.
Although Aon Hewitt reported last autumn that the trend of healthcare premium increases was the lowest in the prior six years, the company said in a new study that the cost of providing healthcare coverage for a single employee has reached $8,800 – up 40% during that same period of time, even though the nation has experienced both the Great Recession and stagnant economic growth during that period of time. Meanwhile, employee out-of-pocket costs have reached nearly $5,000 per person annually – up 64% over the past six years. And Aon Hewitt predicts that costs for both will increase an average of 8% to 9% for the “foreseeable future.”
Nevertheless, 94% of 800 large and mid-sized companies recently surveyed said they intended to keep coverage in place over the next five years, although a large number of them say they will shift some burden to employees in terms of planning their healthcare.
“The allure of exiting completely is strong until you look at the numbers,” said said Jim Winkler, chief innovation officer for the U.S. Health & Benefits practice at Aon Hewitt. “Between the Affordable Care Act penalties for failing to offer coverage and the ensuing talent flight risk, most employers believe they need to continue to play a role in employee health, but want a different and better outcome.”
However, 40% of the companies also said they are considering the implementation of programs such as a “house money/house rules” approach. That means employees may have their premiums or out-of-pocket costs lowered if they demonstrate healthy behaviors and engage in biometric screenings. Or prescription co-payments may be waived if an employee can demonstrate that they are adhering to a prescription regimen to treat a chronic illness.
“New models of delivery, new approaches to managing health, and new compliance requirements are challenging employers to think differently about their role in 'owning' health insurance responsibilities for employees and their dependents,” said John Zern, executive vice president and the Americas health and benefits practice director for Aon Hewitt. “Over the past decade, employers have reserved an increasing portion of their cash compensation program to pay-for-performance bonus programs. We see similar approaches emerging with health benefits.”
In addition to such incentives, the Aon Hewitt study suggested that employers may also offer coverage to their workers via private health insurance exchanges. Such an exchange was recently announced by Xerox subsidiary Buck Consultants. The exchange, which would open for enrollment this fall, would focus on employer groups with 3,000 or more workers.
