The future of employer sponsored medical benefits lies in what’s happening now. Regardless of what happens in the upcoming elections, no leadership is in a position to unwind history or throw babies out with the bathwater. It’s just the way government works. You can expect - whoever is in place and sits on whatever side of the aisle – medical costs, Medicare operations, and the Affordable Care Act to undergo some scrutiny.
That’s a big ship to turnaround, and revolutions are not likely. But, you might get a better handle on things if you look at the numbers prepared by Benefitfocus® for SHRM:
- 52% of large employers surveyed offer one HDHP (high-deductible health plan). Its inclusion provides an apparently lower cost to the employee. Most have transitioned to this offering option, and more are considering making the HDHP their dominant offering in the next few years.
- 41% of employees have opted for the HDHP. When given the choice, employees – especially younger workers – opt for the higher risk presented by the HDHP. Given the options, the HDHP allows for a lower employer premium, but it may not suit individual or family needs.
- HDHPs also reduce the employer’s cost. In doing so, it positions the company better to avoid the Cadillac tax provisions of the Affordable Care Act by lowering the average paid per enrollee. But, the Cadillac tax may never see the light of day before its 2020 implementation, and health care inflation may wipe out that advantage by then.
- HSAs (health savings accounts) are not performing well. The most effective HDHP assumes an offset by personal savings accumulated for health spending. Even where the employer subsidizes the savings contributions, employees are not using the accounts fully. Opting out of this behavior leaves employees vulnerable now and into their retirement.
- Voluntary benefits go begging. Critical illness coverage, hospital indemnity, accidental injury policies, and more could fill some of the gaps presented with HDHPs. As of 2015, only 14% of employees enrolled in voluntary plans offered by only 36% of large employers.
Current behavior describes future outcomes, and some of this activity is not encouraging for employees or employers. Absent any miraculously workable solutions, you have to acknowledge the impact of decisions made now. These decisions are shaping an insecure status quo, much of which has secured footing as an entitlement.
If cost management continues to drive employer offerings, it continues to strengthen employee dissatisfaction. If corporate cost management concerns do not drive the benefits market, remedies will remain unexplored and untried.
Sometimes moving to a benefit plan offered through a PEO or professional employer organization can lower employer costs and offer more plan choices based on their leverage of high employee numbers. This economy must have the will and wherewithal to structure innovative solutions in employee sponsored medical benefits.
The results reported here come from the Benefitfocus® 2015 study of large businesses. Benefitfocus® is a publicly traded employee benefits management platform.
Other research is found at:
National Bureau of Economic Research
Bureau of Labor Statistics
International Federation of Employee Benefit Plans