Health insurance rates in the group market have remained relatively stable over the past several years. However, little has been done to impact the cost of medical care, and employers in 2017 will push health insurers for more savings.

As the economy has grown more robust, employers are looking to grow their business and want to rein in employee benefit costs, says Cary Badger, a former Regence Group executive who is now a principal at Chicago-based consulting firm HealthScape Advisors LLC. Employers will increasingly look to carriers to control costs through tighter integration with providers, which could mean more bundled payments for episodes of care, for example. “It’s not a fee-for-service environment anymore. Employers want to see some creativity on the part of carriers. Employers don’t want to get out of insurance or move to defined contribution….They want robust benefits that they feel are sustainable.”

The Affordable Care Act (ACA) made several important changes to the individual market, which have the potential to take root in the group market, says Mark Hall, a professor of law and public health at Wake Forest University. Those developments include private exchanges and narrower networks. And chaos in the individual market could negatively impact group-market rates if an ACA appeal prompts an increase in uncompensated care. Cuts to the Medicaid program also could affect group rates, says Chantel Sheaks, an employee benefits attorney and director at PwC.

Although it’s difficult to predict whether group rates will stay steady, large employers are starting to look to data analytics to eliminate surprises by uncovering the underlying causes of rate hikes, suggests Paul Rooney, managing partner at Boston-based EBS Insurance Brokers. “You can’t manage what you can’t measure. A deep understanding of cost drivers is vital for plan sponsors in their quest to bend the cost curve downward,” he says.

Repeal Could Reduce Paperwork

Eliminating the ACA’s employer and individual mandate provisions — as Republican lawmakers have proposed — won’t impact coverage for many large employers directly, but it could relieve some administrative burdens, says Steve Wojcik, vice president of public policy at the National Business Group on Health. Employers, he explains, wouldn’t have to dedicate as much time to dealing with “government micromanagement” of employee benefits. Moreover, while ACA-compliant health plans include free preventive care for members, most employer plans already had generous preventive benefits prior to the ACA, he adds.

Here’s a look at what large employers and their insurance carriers can expect in the year ahead:

  • Enhancements to account-based health plans: President-elect Donald Trump and Republican lawmakers want to expand access to health savings accounts (HSAs), which likely would mean employers and employees could contribute more to the tax-advantaged accounts. Wojcik says his members would like to let their workers use HSAs to pay premiums, which is now allowed only for retiree coverage. Employers also would like the IRS code expanded to allow workers to tap their HSAs and flexible spending accounts for wellness expenses and other things that keep enrollees healthy, he says. As of June 30, there were more than 18 million HSAs, which collectively held nearly $35 billion, according to consulting firm Devenir Group, LLC.

  • Deeper employee engagement: A growing number of employers encourage their workers to take a more active role in their health care. That trend is expected to increase in 2017. Employers traditionally have leveraged plan design to drive utilization behavior in an effort to reduce medical expenses. But employers are expecting, and even demanding, more behavior changes as they seek a deeper impact on cost, says Valerie Bogdan-Powers, chief business development and client relations officer at Horan Securities, Inc., a Cincinnati-based benefits consultancy and United Benefit Advisors (UBA) partner firm.

  • Adoption of narrow networks: While moving to a narrow provider network can reduce coverage costs, it’s generally a one-time cost savings that doesn’t improve medical trend significantly, says Badger. “It’s a bit of an artificial tactic, and workers generally don’t like them,” he says. But Wojcik contends there has been increased interest in tighter, high-performance networks if carriers can ensure patients receive high-quality, cost-efficient care. Over the past 20 years, people have seen wide variation in quality, he says. “I don’t think it’s a one-time fix. Employers could reap the benefits of it each year if they use quality as a criterion for those networks.” Bogdan-Powers says some employers are embracing narrow networks and/or going to a single provider system in order to further cost improvements.

  • Providers opting out of networks: Sheaks says she’s seen an uptick in providers opting out of networks, which creates potential problems for insurers and employers. When a worker seeks care from an out-of-network provider, neither the carrier nor the employer can do anything to control costs. And enrollees typically don’t understand that they could be balance billed — unless state law prohibits it in insured arrangements — or the claim may not be paid at all, she says.

  • More litigation: Sheaks says 2017 will bring more litigation for insurance carriers. She notes that 2016 was record-setting in the number of proposed health care class actions — from mental health parity to COBRA notices to lactation. “I see this continuing into 2017, and insurers and plan sponsors need to be on the defensive.”

  • Cadillac tax 2.0: Late last year, Congress delayed implementation of the Cadillac tax, or excise tax on high-value health plans, from 2018 to 2020. But employers could face a different type of cost under the new administration. Tom Price, M.D. (R-Ga.), Trump’s pick to head HHS, has proposed capping the tax deductibility of health coverage at $8,000 per worker ($20,000 for families). If that happens, consumers could see higher out-of-pocket costs if employers boost copayments and deductibles to keep premiums below the cap, says Bryce Williams. “The effect will be similar to the Cadillac tax,” he says, “with health care inflation taken on solely by the employees.” Sheaks agrees and notes that while many employers support repeal of the Cadillac tax, the replacement would be a tax on workers.

  • Private exchanges: Despite the enormous buzz around private insurance exchanges a few years ago, many employers are dubious the model can reduce coverage costs. While Badger suggests employers are willing to experiment, he says they want a model where carriers compete more aggressively on more than premiums, such as the performance of provider relationships. Alternative solutions, such as benefits administration and human resource information systems (HRIS), offer employees a similar buying experience without requiring a defined contribution model, adds Rooney. Vicki Ferentz, vice president at Acadia Benefits, Inc., a UBA partner firm in Portland, Maine, says employers in her area haven’t shown much interest in private exchanges. Many employers are afraid to make a change, she says.

  • Enhanced wellness programs: Rooney says successful wellness programs have proven to be effective in mitigating rate hikes. Groups that implement a sustainable wellness program as part of their corporate culture experience a higher return on investment in the form of a healthier employee population and lower claims experience, he says.

  • Narrower prescription coverage: Everyone wants their drug covered and their condition to have access to the newest and best drugs, but that comes with a hefty and growing price tag, says Ferentz. Many insurance companies have created narrower formularies, to help control costs in their community rated pools — and for the claims experience on their large experience-rated groups/customers. These new formularies come with higher copays, higher coinsurance and dropped coverage for certain drugs, she says. Employers then have to determine the type of benefits they can afford, as well as the impact on employee relations and retention issues.

  • Better shopping through technology: Employers are investing in tools that allow employees to research cost and quality of services prior to receiving them, says Bogdan-Powers. Technology is advancing in this area to allow a better shopping experience in an industry that has had very little. An example of this is the ability to research MRI costs across multiple providers within a ZIP code prior to making an appointment. Employers are setting maximum prices on certain procedures to encourage better engagement, she adds.