Two new employer health benefits surveys revealed increasing health care costs, while anecdotal evidence from consultants show employers have a lack of real interest in changing plan designs or adding new initiatives — unless they can bring a big bang for the buck. Industry insiders say legislative uncertainty may be the cause of some of the hesitation. But despite all the complexity, employers know they can’t wait for help from legislative fixes, government programs or insurers’ offerings to improve health care costs, and they are increasingly confident they will be able to continue to provide health insurance to their employees.

The 22nd Annual Best Practices in Health Care Employer Survey, released Aug. 2 by Willis Towers Watson, shows that employers expect health care costs to rise by 5.5% in 2018, up from 4.6% in 2017. It also found that despite uncertainty about efforts to repeal and replace the Affordable Care Act, employer confidence in offering health benefits has reached its highest level since the ACA’s passage in 2010.

This year’s Willis Towers Watson study found that 92% of employers are “very confident” their organization will continue to sponsor health benefits over the next five years. Additionally, 65% are “very confident” they will offer employees health care coverage over the next 10 years (see chart below).

“Employer confidence has been somewhat of a roller coaster,” says Trevis Parson, chief actuary, health and benefits, North America at Willis Towers Watson. He surmises that legislative uncertainty most likely has been the cause during years when confidence has been low.

Before the ACA passed, employers were concerned they wouldn’t be able to afford employee health insurance, he says. The confidence numbers seem to reflect how employers feel about regulatory or legislative threats to their bottom line.

Parson says a lot of the findings in this year’s survey stayed the same. “It’s not as if we’re seeing a big change in gross trends,” he tells AIS Health. But what has changed this year is the indication that employers don’t want to shift more of the cost increases on to their employees. Parson says he can only speculate as to the reasons for this.

With heftier increases passed to employees in the recent past, perhaps employers are hoping to remain competitive in retaining and securing good workers, Parson says. This is translating into employers looking for ways to shrink the overall cost of health care. “Employers are saying, ‘Nobody else is going to solve this problem for us; we need to solve it,'” he says.

Given the current scenario, the only thing left for employers to do is “make the pie smaller,” Parson says. They are looking for programs with “the biggest bang for the buck” to move the needle on costs, such as on-site clinics for plan sponsors that have a big enough head count to support such a move.

The study found that employers have made progress refining their subsidy, vendor and carrier strategies. Now they are looking for ways to improve patient engagement, expand the use of analytics and efficiently manage pharmacy costs and utilization.

“Employers understand that there is no single strategy for success when it comes to health care, and it is critical to engage employees through education and communication that will create a win/win,” said Catherine O’Neill, a Willis Towers Watson senior health care consultant, in a statement. “The most effective health programs will include a broad range of strategies that encompass employee and dependent participation, program design and subsidy levels, and plan efficiency. The ultimate goal is to offer a high-value plan that manages costs for both employers and employees while also improving health outcomes.”

But despite the desire to act, as reported by Willis Towers Watson, many employers seem less eager to make changes, says Chantel Sheaks, a director at PwC. “Because of the uncertainty on the legislative front, employers seem to be leery of any change,” she says. “Other employers may finally be moving to high deductible health plans that are compatible with [health savings accounts], but that is about as adventurous as they want to get. It makes a lot of sense that an employer would not change anything in such uncertain times, especially for fear that they would need to spend money to come into compliance with any new legislation.”

On Aug. 8, the National Business Group on Health (NBGH) issued its Large Employers’ 2018 Health Care Strategy and Plan Design Survey, in which large employers project the total cost of providing health care and pharmacy benefits to rise 5% in 2018, for the fifth consecutive year. It also found that employers are looking for new methods of controlling health care costs, improving outcomes and increasing satisfaction for their employees.

“They are focusing on areas that address how health care is delivered and paid for, such as telehealth, on-site clinics, centers of excellence and accountable care organizations,” an NBGH statement said. “Another strategy many employers are pursuing involves new ways to guide and navigate employees through the complexities of the system. At the same time, employers also remain focused on specialty pharmacy, which continues to be a primary driver of health care costs.”

Employers Regain Confidence in Providing Health Benefits

Employers Regain Confidence in Providing Health Benefits

Sample: Employers with at least 1,000 employees.
Note: High Confidence represents responses of “Very confident.” Years 2004-2016 are based on prior years of the TW Survey.
SOURCE: Willis Towers Watson, 2017 Best Practices Survey