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NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
2MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
About the survey
• Now in its 26th year, the survey was established in 1986
• A national probability sample has been used since 1993. This means that survey results are representative of all employer health plan sponsors in the US with 10 or more employees
• 2,844 employers participated in 2011
• In this presentation, we refer to:- small employers – 10-499 employees - large employers – 500+ employees- jumbo employers – 20,000+ employees
Top Stories
4MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Our headline stories!
• Health care reform is sharpening employers' focus on cost management and providing the business case for bold strategies
• CDHPs are poised to become a mainstream strategy by creating more cost-conscious consumers
• The big challenge in workforce health management is building employee engagement. Incentives clearly work to drive participation, and employers are starting to test their ability to improve health outcomes as well
• Employers that follow best practices -- such as data warehousing, value-based designs and collective purchasing -- report significantly lower costs and trends
5MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
*ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans
Growth in total health benefit cost per employee slowed to 6.1% in 2011 with a 5.7% increase expected for 2012
17.1%
12.1%
10.1%
8.0%
-1.1%
2.5%
0.2%
6.1%
8.1%
11.2%
14.7%
10.1%
7.5%
5.5%5.7%*
6.1%6.9%
6.3%6.1%6.1%6.1%7.3%
2.1%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Annual change in total health benefit cost per employee The good news: Growth in the average total
health plan cost per employee
slowed in 2011
6MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
*ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1990-2011; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1990-2011.
Growth in total health benefit cost per employee slowed to 6.1% in 2011 with a 5.7% increase expected for 2012
17.1%
12.1%
10.1%
8.0%
-1.1%
2.5%
0.2%
6.1%
8.1%
11.2%
14.7%
10.1%
7.5%
5.5%5.7%*
6.1%6.9%
6.3%6.1%6.1%6.1%7.3%
2.1%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Workers' earningsAnnual change in total health benefit cost per employeeOverall inflation The bad news:
Cost is still rising far faster than
inflation or wages
7MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Total health benefit cost per employee in 2011
$9,702$10,438$10,146
All employers Small employers(10-499
employees)
Large employers(500 or moreemployees)
+ 6.1% + 3.6%
Average total health benefit cost
per employee
tops $10,000
+ 9.9%
8MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
22%27%28%
48%
Employers that consider these PPACA provisions to be a “significant concern” for their organizations
Plans must pay 60% of covered
services
New full-time employees must be
auto-enrolled
High-cost plans may be subject to
40% excise tax
All employees working avg. 30+ hrs/wk in a
month must be eligible for coverage
Data based on employers with 50+ employees.
Employers will face additional cost pressure in 2014 as more PPACA provisions kick in – but their biggest worry is the excise tax in 2018
9MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Against the backdrop of health reform, employers are taking bolder steps to manage costLarge employers
They’re planning to add low-cost plans like CDHPs...…as the default plan for auto-enrollment 53%
…for newly eligible PTEs 17%*
They’re planning to narrow the scope of their benefit spending…
…by transitioning some employer-paid benefits to voluntary 38%
…by reducing spending on dependent coverage 32%
And they’re determined to create a healthier workforce!
. …by adding or improving health management programs 87%
*Among those not currently providing coverage to all employees working 30+ hours per week.
10MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
With reform adding administrative complexity, the trend toward outsourcing benefits administration is likely to accelerate
11%
18%
29%
2005* 2011 Likely to outsource asa response to reform
(including thosecurrently outsourcing)
* Outsourced annual enrollment at a minimum
11MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Will employers terminate medical coverage in response to PPACA?Large employers
49%41%
2%7%
Likely to terminate
Not very likely to terminateNot at all likely
to terminate
Very likely to terminate health
coverage
No! Employers remain committed to offering coverage, so cost management will be a priority for years to come
12MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Biggest year-over-year increase in CDHP offerings and enrollment in 2011Large employers
14%
20% 20%23%
32%
6% 7% 8%10%
13%
2007 2008 2009 2010 2011
Percent of employers offering CDHPs
Percent of covered employees enrolled in CDHPs
At the tipping point? Employers drive enrollment into lower-cost CDHPs
13MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Medical plan cost per employeeLarge employers
$10,020
$7,541
$9,511
PPO HMO HSA plan (includesemployer account
contribution)
The appeal of HSAsis clear – they cost
about 20% less than other medical plan
types
14MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Full replacement CDHPs becoming more common – and survey results suggest that cost savings remain when entire population is enrolled Large employers
• Full replacement HSA-based plan: $7,744
• All HSA-based plans: $7,541
• All PPO plans: $9,511
• High-deductible* PPO plans: $7,901
*In-network individual deductible of $1,000+
7%9% 10%
14%
21%
17%
2009 2010 2011
HSA-eligible CDHP
HRA-based CDHP
Percent of CDHP sponsors offering no other plan
Cost is higher for full-replacement, but not by much – and still lower than even high-deductible PPOs
15MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
18%21%
24%24%
29%25%
2009 2010 2011
HSA-eligible CDHP
HRA-based CDHP35%
14%
Employercontribution to HSA
>$750
Employer does notcontribute to HSA
Employees becoming more comfortable with CDHPsLarge employers
About a fourth of employees now select a CDHP when they have a choice of another plan
Employers that offer substantial account contributions to the HSA
see higher enrollment
16MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
65%52%41% Health portal (w/activity or incentive tracking)
47%
52%
55%
82%
70%
80%
83%
Large employers (500+)
22%
30%
33%
42%
34%
53%
35%
Small employers (10-499
employees)
89%Health risk assessment
47%
61%
77%
86%
89%
96%
Jumbo employers (20,000+)
Lifestyle / behavior modification
End-of-life case management
Case management
Nurse advice line
Disease management
Health advocate services
Health management -- the leading long-term cost containment strategy – is migrating from the biggest organizations to the smallest
17MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Investment in health management programs varies widely – which makes it harder to compare results
66%
24%18%
6%
42%36%
31%
13%
Throughhealth plan –
standardservices only
Throughhealth plan –
some optionalservices
Contract withone specialty
vendor
Contract with2+ specialty
vendors
Large employersJumbo employers
Although more employers are using specialty vendors for health management, many still offer only their health plans’standard services
18MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employers that invest more in health management are more likely to be satisfied with ROIAmong large employers that have attempted to measure ROI
Offer HM through health plan —standard services only
Offer HM through specialty vendor or purchase optional services from health plan
11%
36% 53%
Don’t know
Satisfied with ROI
71%
22%
7%
Not satisfied
Don’t know
Satisfied with ROI
Not satisfied
19MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Use incentives or penalties in health management programs
21%
40%
27%
43%
33%
52%
All large employers Employers with 10,000 ormore employees
2009
2010
2011 Employers are adding incentives and penalties to health management programs to boost participation – and some have made them contingent on outcomes
20MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
42%
18% 19%
54%
23% 24%
14% 12%
30%
Health risk assessment Disease management program* Lifestyle coaching*
All employers offering programEmployers offering incentivesEmployers not offering incentives
Average participation rates for health management programsLarge employers
*Percentage of identified persons actively engaged in program
Employers that offer incentives see higher participation rates
21MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
5% 5% 5%
Body massindex
Cholesterol Bloodpressure
9%10%
12%
2009 2010 2011
Employers are beginning to use incentives to reward outcomesrather than just participation
Offering lower premium contributions to non-tobacco users is growing among all large employers…
…and jumbo employers are beginning to provide incentives for achieving or maintaining health status targets
22MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
$8,855
$10,622
PPO/POS cost per employee
5.5%
7.3%
PPO/POS cost per employeeAnnual PPO cost per employee in 2011
Change in cost from 2010
New analysis shows employers are successfully controlling cost through use of best practicesEmployers with 5,000+ employees
Employers that use the greatest number of best practices have lower costs and lower cost increases
Employers using most best practices Employers using fewest best practices
23MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Respondents’ costs were analyzed based on their use of more than 20 cost-management best practices
Offer optional HM services through plan or specialty vendor
Use incentives for HM programs
Use incentives for achieving or maintaining health status targets
Offer EAP
Voluntary benefits integrated with core benefits
Contribution for family coverage in primary plan is at least 20% of premium
PPO in-network deductible is $300+
PPO plan has higher cost-sharing for specialists
Offer CDHP
HSA sponsor makes a contribution to employees’ accounts
Rx mail-order copay is at least 2.5x retail copay
Spousal surcharge
Smoker surcharge
Plan design and health management
High-performance networks
Data warehousing
Collective purchasing
Value-based design
On-site clinic
One or more Rx strategies (i.e. mandatory generics)
One or more specialty drug provisions (i.e., step therapy)
One or more health plan innovations:
–Surgical centers of excellence–Retail clinics–Telemediated care–Medical homes
More advanced cost-management strategies
24MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Best practice trends to watch: Value-based design
• Waive/reduce cost-sharing for maintenance drugs
• Waive/reduce cost-sharing for specific drug therapies shown to reduce overall cost
• Waive/reduce cost-sharing for non-drug treatments based on effectiveness
25%
17%
31%
14%
All large employers(500+ employees)
Employers with20,000+ employees
20102011
The largest employers are rapidly adopting value-based design
Most common value-based design provisions:
25MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Best practice trends to watch: More efficient delivery systemsEmployers with 5,000 or more employees
Not available14%Not availableHigh-performance networks
51%18%Not availableSurgical centers of excellence
56%6%3%Medical homes
11%
In place in 2011
38%5%Telemedicine
Interested in pursuingIn place in 2010
Employers are looking beyond plan design to how and where care is delivered
More on cost
27MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
$5,758$6,348
$6,918$7,379
$7,832$8,229
$8,728$9,286
$10,073$10,438
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
*Average increase projected for 2012 after changes; increase of 7.2% predicted before changes
+6.7%
Total health benefit cost for active employees up 3.6% in 2011Large employers
+11.5%+10.2%
+9.0%
+6.1% +5.1%+6.1%
+8.5%+3.6%
+6.4%
+5.2%*
28MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Factors that affect average cost per employeeIndustry—large employers
$8,146
$9,794$10,513 $10,754 $10,819 $10,889
$11,251
Wholesale/Retail
Services Financialservices
Transp./Communic./
Utility
Health care Manufacturing Government
29MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Factors that affect average cost per employeeRegion—large employers
$11,115$10,360
$9,442
$11,334
South Midwest West Northeast
30MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Factors that affect average cost per employeeEmployer size
$9,702$10,544 $10,425 $10,432 $10,336 $10,457
10-499 500-999 1,000-4,999 5,000-9,999 10,000-19,999 20,000 ormore
Number of employees
31MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Factors that affect average cost per employeeEmployer/employee demographics—large employers
$10,438$10,999
$11,779 $11,766
All large employers Average employeeage 45 or higher
Dependent coverageelection 65% or
higher
75% or moreemployees in unions
More on Consumerism and CDHPs
33MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Health care consumerism in a nutshell
• Consumerism means taking personal responsibility for maintaining or improving one’s health and for choosing cost-effective, quality health care providers
• Strategies for encouraging consumerism range from providing employee communication and information to innovative plan design
• Consumerism is more than a consumer-directed health plan
34MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
What is a consumer-directed health plan?
A plan under which employees spend money from Health Reimbursement Accounts (HRAs) or Health Savings Accounts (HSAs) to purchase routine services directly. Non-routine expenses are covered by traditional insurance after members meet a generally high deductible. Online health and financial tools are typically provided.
35MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Sharp increase in CDHP offerings among large employers in 2011Percent of employers offering/likely to offer CDHP, by employer size
48%
46%
42%
34%
26%
20%
2011
54%
46%
49%
38%
28%
22%
Very likely to offer in 2012
51%
41%
39%
24%
18%
16%
2010
43%
39%
42%
20%
16%
15%
2009
41%
36%
22%
16%
9%
7%
2007 2008Number of employees
45%20,000 or more
40%10,000-19,999
28%5,000-9,999
22%1,000-4,999
14%500-999
9%10-499
36MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
25%41%24%35%Jumbo employers
12%27%10%24%Large employers
10%18%5%15%Small employers
HRA-basedHSA-eligibleHRA-basedHSA-eligible
Very likely to offer CDHP in 2012Offer CDHP in 2011
Employers of all sizes prefer HSAs to HRAs
37MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employees more likely to enroll in HRA-based plansPercent of covered employees enrolled*, among large CDHP sponsors
31%
24%21%
12%
Average enrollment Median enrollment
HRA-based plans
HSA-eligible plans
* When CDHP is offered as an option alongside other medical plan choice
More on HSA-eligible CDHPs
39MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
HSA-eligible CDHP enrollee profile, compared to PPO and HMO enrolleesLarge employers
57%
42
HMO
57%57%% electing dependentcoverage
4341Average age
PPOHSA-eligible
CDHP
Employees enrolled in:
40MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Change in HSA enrollment over timeAmong large employers that have offered an HSA-eligible CDHP* for 3 years,average percent of eligible employees enrolled
18%
21%
24%
2009 2010 2011* As an option alongside other medical plan choices
41MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee contributions for HSA-eligible CDHP coverage significantly lower than for PPO and HMO coverageLarge employers
3%11%
4%
8%
6%15%
No contribution
required
30%$376Family22%$102Employee-only
HMO
31%$366Family
23%$111Employee-onlyPPO
25%$233Family18%$58Employee-only
HSA-eligible CDHP
Average contribution as a
% of premiumAverage monthly
dollar amount
42MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Account contributions, deductibles, and OOP maximumsLarge HSA sponsors
$1,200
$500
Employer contribution
amount* (median)
$6,000$3,00075%Family
$3,000$1,50075%Employee-only
Out-of-pocket maximum (median)
Deductible (median)
% of sponsors making account
contribution
* Among employers that contribute to the account
More on HRA-based CDHPs
44MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
HRA-based CDHP enrollee profile, compared to PPO and HMO enrolleesLarge employers
57%
42
HMO
57%55%% electing dependentcoverage
4342Average age
PPOHRA-based
CDHP
Employees enrolled in:
45MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Change in HRA enrollment over timeAmong large employers that have offered an HRA-based CDHP* for 3 years,average percentage of eligible employees enrolled
24% 25%
29%
2009 2010 2011
* As an option alongside other medical plan choices
46MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee contributions for HRA-based CDHP coverage significantly lower than for PPO and HMO coverageLarge employers
3%11%
4%8%
4%14%
No contribution
required
30%$376Family23%$102Employee-only
HMO
31%$366Family23%$111Employee-only
PPO
25%$275Family24%$79Employee-only
HRA-based CDHP
Average contribution as a
% of premiumAverage monthly
dollar amount
47MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Account contributions, deductibles and OOP maximumsLarge HRA sponsors
$1,000
$500
Employer account contribution
(median)
$6,000$3,000Family
$3,000$1,500Employee-only
Out-of-pocket maximum (median)
Deductible (median)
48MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Key features of HRA-based CDHPLarge HRA sponsors
34%
$1,500$3,000
27%
21%
A maximum is placed on the amount of funds in account that may accumulate or roll over
Maximum for an individual (median)Maximum for a family (median)
Account funds may be rolled forward and usedafter retirement
The HRA is the only medical plan offered to enrollees (full replacement)
More on Health Management
50MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
More large employers able to measure health management return on investment (ROI) Employers offering health management programs
4%3%• Internal staff
59%64%
Of those measuring ROI, percent that are satisfied with their return on investment in health management programs
16%9%• Consultant or other third-party vendor (other than health management vendor)
33%14%• Health plan or health management vendor
Have measured ROI using...
Jumbo employers
Large employers
51MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
ID$226Median annual amount of premium reduction
54%24%Provide incentive for participating in lifestyle coaching
27%22%Provide incentive for participating in biometric screening
ID$300Median annual amount of premium reduction
$240$240Median annual amount of premium reduction
57%37%Provide incentive for completion of health risk assessment
Jumbo employers
Large employers
Health management incentivesBased on large employers offering the program
ID = Insufficient data
52MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
7%
10%
40%
43%
Cash
Lower premium contributions
Contribution to HRA, HSA, FSA
Type of incentive used with health risk assessmentAmong large employers providing health risk assessment incentive
Lower deductible, copay or other cost sharing
53MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
9%
9%
37%
42%
Cash
Contribution to HRA, HSA, FSA
Type of incentive used with biometric screeningAmong large employers providing biometric screening incentive
Lower premium contributions
Lower deductible, copay or other cost sharing
54MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
9%
9%
36%
37%
Cash
Lower premium contributions
Contribution to HRA, HSA, FSA
Type of incentive used with behavior modification programAmong large employers providing behavior modification incentive
Lower deductible, copay or other cost sharing
Eligibility and Coverage Provisions
56MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
• Make coverage available to PTEs: 65%
• Average number of hours required for eligibility: 23/week
• Of the employers covering PTEs:– 8% offer different plans to PTEs and FTEs
• Average PTE contribution, as a % of premium – 35% for employee-only coverage– 41% for family coverage
Coverage for part-time employeesLarge employers with at least some PTEs
57MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Same-sex domestic partner coverage varies by regionLarge employers
27%
79%
34%
55%
26%
64%
39%
49%
28%
46%
All largeemployers
West Midwest Northeast South
2010
2011
58MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Special provisions addressing spouses with other coverage available
7%7%
2%
13%
Spouses with other coverage are noteligible
Spouses with other coverage must paysurcharge
Large employers
Jumbo employers
59MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Slim majority of employers cover bariatric surgeryLarge employers
28%24%
48%46%
30%24%
Covered, but member mustcomply with behavior
modificationprogram/standards
Covered the same as anymedically necessary
procedure
Not covered
Large employersJumbo employers
Preferred Provider Organizations
61MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
PPO* cost per employee, 2002-2011Large PPO sponsors
$5,220$5,730
$6,181 $6,518$7,029
$7,429$7,861
$8,334$9,033
$9,511
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Note: Some of the survey respondents that carve out prescription drug benefits to a freestanding pharmacy benefit manager did not include prescription drug cost in their PPO cost. If all cost for freestanding Rx benefits were included, we estimate the average PPO cost per employee would be 2.5% higher.
* Results for 2002 - 2007 include PPO plans only. Results beginning in 2008 include PPO and POS plans
62MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
PPO* cost per employee, by regionLarge PPO sponsors
$9,019$7,988
$9,989$9,816$10,388
$8,575
$10,247$9,459
West Midwest Northeast South
20102011
+ 4.4%+ 4.9%
+ 4.0%
+ 7.3%
* Includes POS plans.
63MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Individual Family
Average contribution as a % of premium
Average monthly contribution
Employers requiring contribution
Employee contribution requirements for PPOLarge PPO sponsors
92% 96%
23% 31%
$111 $366
64MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee cost-sharing requirements for PPOLarge PPO sponsors
Specialist’s office visit--48%Require higher copay for specialist visit
--$35Copay amount, when higher (median)
40%20%Coinsurance amount (median)91%59%Require coinsurance5%17%Require copay
Lab tests / X-rays
40%20%Coinsurance amount (median)89%23%Require coinsurance$25$20Copay amount (median)12%81%Require copay
Primary care physician’s office visit
$1,800$1,000Family amount (median)$750$500Individual amount (median)93%83%Require deductible
Out-of-networkIn-networkDeductible
65MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee cost-sharing requirements for PPO, continuedLarge PPO sponsors
86%86%Plan includes maximum$4,000$2,000Individual OOP max (median)
Hospitalization
Out-of-pocket maximum
--$100Copay amount (median)--80%Require separate copay
Emergency room visits
40%20%Coinsurance amount (median)93%72%Require coinsurance$250$250Copay amount (median)12%19%Require per-admission copay
Out-of-networkIn-network
66MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee contribution requirements for PPOSmaller Employers
500-4,999 employees
50-499 employees
Family coverage96%95%Employers requiring contribution32%45%Average contribution as a % of premium$367$524Average monthly contribution
$112$124Average monthly contribution23%27%Average contribution as a % of premium92%79%Employers requiring contribution
Employee-only coverage
67MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee cost-sharing requirements for PPOEmployers with 50-499 employees
Deductible
Specialist’s office visit--40%Require higher copay for specialist visit--$40Copay amount, when higher (median)
30%20%Coinsurance amount (median)80%37%Require coinsurance9%25%Require copay
Lab tests / X-rays
30%20%Coinsurance amount (median)76%12%Require coinsurance$30$20Copay amount (median)26%89%Require copay
Primary care physician’s office visit
$2,500$1,500Family amount (median)$1,000$1,000Individual amount (median)90%85%Require deductible
Out-of-networkIn-network
68MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Employee cost-sharing requirements for PPO, continuedEmployers with 50-499 employees
77%77%Plan includes maximum$4,000$2,500Individual OOP max (median)
Hospitalization
Out-of-pocket maximum
--$100Copay amount (median)--76%Require separate copay
Emergency room visits
40%20%Coinsurance amount (median)
ID = Insufficient Data
85%58%Require coinsuranceID$250Copay amount (median)9%15%Require per-admission copay
Out-of-networkIn-network
Prescription Drug Benefits
70MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
16.9%16.1%
14.3%
11.5%9.9% 9.3%
7.6% 7.6%6.3%
5.1%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Prescription drug benefit cost is now growing more slowly than overall medical plan cost Cost increase in primary medical plan for large employers
71MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Other
4 or more levels
3 levels for generic, formulary brand, non-formulary brand
2 levels for generic, brand drugs
Same level of cost-sharing for all drugs
Cost-sharing structure:
4%3%
10%12%
71%72%
11%10%
5%3%
Mail-orderRetail
About one in ten employers have added a fourth cost-sharing tier in their drug plans Cost-sharing provisions in employers’ primary plan
72MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Non-formulary brand
Formulary brand
Generic
In plans with 3 copay levels
Brand-name
Generic
In plans with 2 copay levels
$97$49
$57$30
$19$10
$50$27
$19$11
Mail-orderRetail
Average copayment amounts in prescription drug plans In large employers’ primary medical plan
73MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Any drug categorySpecialty / biotechNon-formulary brand
Formulary brandGeneric drugs
24%27%4%5%
15%17%
13%16%9%10%
Mail-orderRetail
Use of coinsurance in drug plans Percent of large employers requiring coinsurance
74MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Drug benefits have been carved out of primary medical plan, by employer size
57%
48%
42%
19%
10%
500-999 employees
1,000 – 4,999 employees
5,000 – 9,999 employees
10,000 – 19,999 employees
20,000 or more employees
75MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Participates in a prescription drug purchasing coalition or collective
15%
22%
All large employers (500 or more employees)
Jumbo employers (20,000 or more employees)
MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Specialty drug cost-management strategiesBased on employers with 1,000 or more employees
12%
24%
30%
38%
42%
49%Utilization management
Formulary management
Retail lockout
Higher cost-share for specialty medications
Medical lockout
Step therapy
Dental Care Benefits
78MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
$657
$766
$736
$914
$757
$635
$809
$732
$913
$761
20102011
South / +3.5%
Northeast / -5.3%
Midwest / +0.5%
West / +0.1%
All large employers / -0.5%
Dental cost per employee, by region Large dental plan sponsors
79MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Plan includes annual benefit maximum 93%Individual maximum (median) $1,500
Plan includes separate max for orthodontic 89%Individual ortho lifetime max (median) $1,500
Dental plan designLarge dental plan sponsors
80MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Dental plan design (continued)Large dental plan sponsors
In-network Out-of-network
Individual deductible
% requiring deductible 81% 75%
Median deductible $50 $50
Family deductible
% requiring deductible 76% 71%
Median deductible $150 $150
MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Other dental services coveredLarge dental plan sponsors
19%
37%
38%
55%
81%
Sealants
Implants
Adult orthodontics
Posterior composites
TMJ treatment
Voluntary and Work-Life Benefits
83MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Voluntary benefits are integrated with core benefit program on same administrative platformLarge employers that offer one or more voluntary benefits
62%
38%
Voluntary benefits are not
integratedVoluntary and core
benefits are integrated on same
platform
84MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Provide voluntary insurance benefits (paid partially or fully by employee)Large employers
Supplemental employee term life 86% Disability 83%
Dependent term life 82%
Vision 76%
Accident 58%
Cancer / critical illness 38%
Whole / universal life 36%
Long-term care 32%
Travel 20%
Auto / homeowners 17%
Hospital indemnity 14%
85MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Most important objectives for offering voluntary benefitsLarge employers
4%
46%
59%
66%
70%
To give employees the opportunity to fill gaps in employer-paid benefits
To help employees take advantage of group purchasing power
To accommodate employee requests
To offer additional benefits at no cost to the employer
Other
Retiree Health Care
87MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
While employers remain committed to providing coverage to activeemployees, offerings of retiree medical plans* are falling once againPercent of large employers
46%41%
38%35%
29% 28% 29%31%
28%25% 24%
40%
35%31%
28%23% 21% 21%21% 21%
19%16%
Offer coverage to pre-Medicare-eligible retireesOffer coverage to Medicare-eligible retirees
*Plan must be offered on an ongoing basis (i.e., new hires are eligible).
1993 1995 1997 1999 2001 2003 2005 2007 2009 2010 2011
88MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
7%
30%35%
45%
23%22%
4%
16%
35%
29%26%
14%
10-499 500-999 1,000-4,999 5,000-9,999 10,000-19,999 20,000 ormore
Pre-Medicare-eligible
Medicare-eligible
Number of employees
Offer retiree coverage* in 2011, by employer size
*Plan must be offered on an ongoing basis (i.e., new hires must be eligible).
89MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
58%20%
27%19%
64% 20%
Pre-Medicare-eligible retirees Medicare-eligible retirees
Have reduced or terminated benefits for employees hired or retiring after a specified dateLarge retiree plan sponsors
Reduced benefits
Terminated coverage
All retirees receive the
same benefits
Reduced benefits
Terminated coverage
All retirees receive the
same benefits
MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Expect to continue to offer a retiree medical plan to new hires for at least the next five yearsLarge retiree plan sponsors
65%
18%
17%
Not sure
No Yes
Recap
92MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Key takeaways: Health reform is sharpening focus on cost management
• Cost pressures in 2011 included new PPACA provisions:
– Extending dependent eligibility to children up to age 26 (resulted in an average increase in enrollment of 2%)
– Removing lifetime and some annual benefit limitations
– Removing pre-existing condition exclusions for children under 19
• Looking ahead to the PPACA provisions still to hit, many employers are concerned about the excise tax on high-cost plans
• Still, relatively few expect to terminate health coverage -- so cost management will be a top priority in the years of change ahead
• As the 2011 survey results show, many employers have already accelerated their cost management efforts
93MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Key takeaways: CDHPs poised to become mainstream cost management strategy
• Offerings of CDHPs grew sharply in 2011 -- from 23% to 32% of large employers, and from 16% to 20% of small employers – 65% of large employers expect to offer one within the next 5 years
• Enrollment in CDHPs rose from 11% to 13% of all covered employees; this is up from just 3% in 2006
• The average per-employee cost of an HSA-based CDHP is about 20% lower than that of a PPO -- $7,541 compared to $9,511, among large employers
• Employers adding CDHPs may be looking ahead to 2014, when many will experience an increase in enrollment due to auto-enrollment and the requirement to extend coverage eligibility to all employees working 30+ hours per week
• CDHPs may also help employers avoid hitting the threshold for the excise tax, the PPACA provisions that concerns the most employers
94MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Key takeaways: The big challenge in health management right now is building employee engagement
• Use of health management incentives jumped from 27% to 33% of large employers. Over half of employers with 10,000+ employees now use them.
• More employers are tying the incentive to the health plan. For Health Assessments, most common incentive among large employers is now a lower premium contribution (43%) rather than cash (40%). Median value of contribution:– When cash/gift card: $75– When lower contribution: $240
• Incentives work! Average participation in lifestyle programs doubles when incentives are used, and Health Assessment completion nearly doubles.
• Outcomes-based incentives are emerging: More than a third of jumbo employers offer lower premium contributions or other incentives to nonsmokers – and 5% provide incentives for achieving healthy BMI, BP, cholesterol levels.
95MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS 2011
Key takeaways: Employers that follow cost-management best practices are experiencing success in controlling health benefit cost
• The survey asks employers about 25 strategies that could be considered cost-management best practices. Respondents were divided into four equal groups based on the number of best practices they follow.
• When the top and bottom groups were compared, the employers using 8 or fewer best practices had, on average, 13% higher total cost per-employee cost than those using 13 or more – and 20% higher PPO/POS cost.
• Average cost increases for 2011 were higher as well for the group using the fewest best practices compared to those using the most. Foremployers with PPO/POS plans, the difference was 7.3% versus 5.5%.
• While not conclusive, these results* support what many employers believe: effective strategies exist to reduce health benefit cost growth!
*This analysis was based on survey respondents with 5,000 or more employees because only employers of this size were asked to complete all of the questions concerning best practices. Results are unweighted.
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