employee benefit trends€¦ · millennials (age 34) traditionalists (age 70–87) base pay...
TRANSCRIPT
0© MERCER 2016
H E A L T H W E A L T H C A R E E R
EMPLOYEE BENEFIT TRENDS
DENISE JEWELL, PRINCIPALPHOENIX, AZ
JUNE 2016
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FIRST, LET’S UNPACK TODAY’S MEGA TRENDSTHE HEALTH CARE MARKET TIPPING POINT
ACCELERATING COST PRESSURE… MEGA-TRENDS COMPOUNDING DISRUPTION
…WITH POOR CARE QUALITY
Explosion of technology and data
Growing consumer accountability
Multi-generational behaviors and needs
Dramatic changes to payor/provider roles
Broad regulatory changes
Preventive health
Acute care
Chronic care
Patient compliance 50% 70% 60%
Care delivery 99% 70% 80%
Efficiency 50% 49% 48%
Health cost outpacing inflation
US: Highest per capita health care spend worldwide
Employer trend expected to continue risingBEFORE PLAN
CHANGESAFTER PLAN
CHANGES
INFLATION EARNINGS
Employees not seeing care improvement
50% efficiency not acceptable in any business
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EXTERNAL ENVIRONMENT MARKET CONSOLIDATION — RISK/OPPORTUNITY
VENDORS
% of hospitals that became part of health systems
PROVIDERS CHANGING ROLES
UNPRECEDENTED CONSOLIDATION IN THE HEALTH CARE ECOSYSTEM IS EXPECTED TO CONTINUE/ACCELERATE, MEANING OPPORTUNITIES — AND RISKS — FOR EMPLOYERS
50% 55% 60% 65%
1999
2001
2003
2005
2007
2009
2011
2013
Source: American Hospital Association TrendWatch Chartbook, 2014
Providers taking risk/selling insurance, e.g.:
Retailers expanding into care delivery, e.g.:
Vendors buying providers, e.g.:
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Design and accounts(e.g. CDHPs, accounts as
a vehicle to save/deliver incentives)
Transparency tools(e.g. technology as an
enabler to build awareness/ empower consumer)
Customization(e.g. build your own
portfolio/risk management for “whole-person”)
…LEADING TO IMPORTANT EMPLOYER CONSIDERATIONS
New Front Door to HealthNew modes of on-demand care delivery (e.g., mobile,
telephonic, retail, smart care team access)
Personalized and PreventativePerson-specific, holistic model of health and
wellness supported by new technologies
Transparent MarketNew health and wellness
marketplace defined by transparent competition
and individual choice
Source: Oliver Wyman 2014, “The Patient to Consumer Revolution”
EXTERNAL ENVIRONMENTGROWING CONSUMER ACCOUNTABILITY
TODAY’S HEALTH ECOSYSTEM IS ENGAGING THE CONSUMER IN NEW WAYS…
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EMPLOYERS MUST CONSIDER MULTIPLE GENERATIONS’ NEEDS AND PRIORITIES WHEN CRAFTING THEIR HEALTH STRATEGY AND EMPLOYEE VALUE PROPOSITION…
EXTERNAL ENVIRONMENTA MULTI-GENERATIONAL WORKFORCE
29% of today’s workforceLive to work – “Office
face time”
Baby Boomers (Age 51–69)
34% of today’s workforceWork to live – “Work should not define life”
Gen X (Age 35–50)
Millennials (Age 34)
35% of today’s workforceWork my way – “Own
careers, meaningful work”
2% of today’s workforceCompany loyalty – “Same
company forever”
Traditionalists (Age 70–87)
• Choose lowest cost plan — maximize take home pay
• Use social tech platforms to find doctors, make appointments, research health conditions
• Benefits: Not a major factor in whether I stay or leave
• Choose plan that fits the needs of my family
• Have disposable income but need to save where possible
• Benefits that meet my family’s needs: Can affect my decision to stay
• Choose plan that can help me maintain my health
• Make more each year, but lots of competing expenses
• Post-retirement medical benefits can play a role in my decision to stay or leave
• Not sure how I’ll pay for healthcare in retirement or which supplement I need
• Want to know how to make the most of what I’ve saved
• Looking to protect/maximize my benefits so I can retire
EMPLOYEES
Sources: Mercer “Inside Employee Minds” 2015, Pew Research Center, 2015
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Source: Mercer “Inside Employee Minds” 2015
EXTERNAL ENVIRONMENTA MULTI-GENERATIONAL WORKFORCE (CONT’D)
Baby Boomers (Age 51–69)
Gen X (Age 35–50)
Millennials (Age 34)
Traditionalists (Age 70–87)
Base pay
Retirement plan
Type of work
Health care benefits
Incentive pay
Paid time off
Flexible schedule
Working for org. I respect
Career opportunities
Training opportunities
Base pay
Retirement plan
Flexible schedule
Health care benefits
Incentive pay
Paid time off
Type of work
Career opportunities
Working for org. I respect
Training opportunities
Base pay
Career opportunities
Incentive pay
Retirement plan
Flexible schedule
Health care benefits
Paid time off
Type of work
Working for org. I respect
Training opportunities
Base pay
Retirement plan
Paid time off
Health care benefits
Incentive pay
Type of work
Flexible schedule
Working for org. I respect
Career opportunities
Training opportunities
1
2
3
4
5
6
7
8
9
10
EMPLOYEES
…AND A DEEPER LOOK AT GENERATIONAL PREFERENCES DEMONSTRATES VARYING TOTAL REWARDS PRIORITIES BY GENERATION
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EMPLOYEES HAVE BROAD FINANCIAL CHALLENGES
1 American Psychology Association, Stress in America: Are Teens Adopting Adults’ Stress Habits? (2014)
2 Bank of America/Merrill Lynch, Workplace Benefits Report (2013)
3 EBRI, The 2014 Retirement Confidence Survey (2014)
4 MetLife, Inc.,10th Annual Study of Employee Benefits Trends: Seeing Opportunity in Shifting Tides (2012)
5 FINRA, Financial Capability in the United States -Report of Findings from the 2012 National Financial Capability Study (2012)
6 National Institute for Retirement Security, The Retirement Savings Crisis: Is It Worse Than We Think? (2013)
7 out of 10 American workers say financial stress is their most common cause of stress.1
80% of employees report an increase in their health care costs in past two years and 56% are saving less for retirement as a direct result of more health care costs.2
58% of workers and 44% of retirees report having aproblem with their level of debt.3
22% of US employees admit to missing at least one day of work in the past year to deal with a financial problem.4
59% of credit card holders engage in at least one behavior that results in interest or fees; 35% engage in two or more such behaviors.5
$40,000 is the median retirement plan account balance for working-age families; $100,000 for near-retirement age.6
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Smok
ing
Advocacy
EXPLOSION OF TECHNOLOGY AND DATA
Employer-Sponsored/Exchange
Communications
Incentives/Challenges
Navigation
M E M B E R
Assessments/Testing
Broad
Big Data Analytics
Centers of
Excellence
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VALUE-BASED CARE IS ALREADY HERE… AND GROWING
A N D W H AT ’ S T O C O M E …W H AT ’ S A L R E A D Y H E R E …
• The number of ACOs in the US more than doubled from 258 in February 2013 to 522 in January 20141
• 67% of the US population lives in an area served by 1 ACO and 40% lives in areas served by 2 or more ACOs1
• Medicare payments attached to alternative reimbursement models are expected to increase from 20% to 50% by the end of 20182
• Health care spend attached to value- based reimbursement models are estimated to increase from less than 20% in 2015 to 46% by 20203
• By 2020, 80%+ of hospital systems will have a fee-for-value component in their P&L3
55-62millionAmericans currently receive health care through ACOs
5.3Min Medicare ACOs
40Mnon-Medicare patients of Medicare ACOs
10-17Mpatients of non-Medicare ACOs
Patients Served by ACOs1
1 As of January 2014. Sources: News releases, company websites, Dartmouth Atlas PCSAs Claritas, Commonwealth Fund; Oliver Wyman analysis
2 http://www.hhs.gov/news/press/2015pres/01/20150126a.html
3 Proprietary Oliver Wyman analysis 2014
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FEE-FOR-SERVICEPROVIDER-CENTRIC
• Payments made to providers for individual services rendered.
• The more services rendered, the more providers get paid.
• Providers often get paid the most for treating poorly managed, non-compliant, unhealthy patients.
FEE-FOR-VALUEPATIENT-CENTRIC
• Payments made to providers based on goals/results – generally cost, quality, and patient experience; maybe in the form of shared savings or care coordination fees.
• The better the care provided, the more providers get paid.
VALUE-BASED CARETHE SHIFT FROM FEE-FOR-SERVICE TO FEE-FOR-VALUE
Patient Centered Medical Home (PCMH)
• PCPs responsible for monitoring and coordinating patient care across all providers and services
• PCPs reimbursed based on toal population cost and quality results
Accountable Care Organization (ACO)
• Delivers integrated care to the patient by bringing together doctors, hospitals, and other health care providers
• ACO providers reimbursed based on total population cost and quality outcomes
Types of Value- Based Care Systems
Value-Based Care creates provider accountability for total population cost and total population health outcomes.
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EXTERNAL ENVIRONMENTHEALTH CARE EXCHANGE LANDSCAPE
3 612
22
40
0
25
50
2014 2015 2016 2017 2018
Enro
llmen
t (M
M)
PRIVATE EXCHANGES PUBLIC EXCHANGES
MULTI-CARRIER, OFFERED BY BENEFIT CONSULTANTS/BROKERS
• Collaborative buying focused on cost reduction• Access to multiple carriers • Focus on self-insured, fully-insured, or both• May offer range of ancillary benefits in addition
to core health
SINGLE-CARRIER, OFFERED BY INSURANCE CARRIERS
• Access primarily to plans offered by the providing carrier
• Primarily focused on fully-insured employers
• Typically offer fewer ancillary benefits
• Offer a viable individual market (guaranteed issue, age rating)
• Subsidies available for <400% Federal Poverty Level
• Spur new product offerings• Create new cost benchmarks
Source: The Kaiser Family Foundation
REGULATORY CHANGES ARE SPURRING NEW DELIVERY OPTIONS FOR EMPLOYERS, AND EXCHANGES ARE BECOMING A MAINSTREAM OPTION
Employers adopting private exchanges within 5 years
— most major surveys estimate ~ one in three.
Projected lives on private health insurance exchanges:
Estimated Actual ProjectedSource: Accenture
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EXTERNAL ENVIRONMENTNEW BENCHMARKS
PUBLIC EXCHANGE OFFERINGS HAVE BECOME AN IMPORTANT NEW BENCHMARK FOR COMPARING PLAN DESIGN AND COST
CONSIDER DOING A DEEP DIVE ANALYSIS ON PUBLIC EXCHANGE OPTIONS BY MARKET
EXAMPLE:
• Houston, TX (rating area 10): Using Houston as reference for public exchange:− In virtually every scenario,
public exchange has lower range of plan cost vs employer-sponsored plans
− Cost increases on average were as low as 2.5%
− Number of plans offered has almost doubled
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ACA UPDATEAREAS OF EMPLOYER CONCERN UNDER ACA
ACA Reporting — Minimum Essential Coverage and Employer-Shared Responsibility• Many employers don’t know how they will
handle ACA reporting:
Excise Tax (Recently extended to 2020)
• Employers that will be subject to the tax if they make no changes to their current plans:
Don’t know(41%)
In house (31%)33%
Source: Mercer’s National Survey of Employer-Sponsored Health Plans, National 500+ Source: Mercer, Survey, Health Care Reform Five Years In, 2015
…AND EMPLOYERS IN PARTICULAR FACE EVEN GREATER COST PRESSURES AND REPORTING REQUIREMENTS IN YEARS AHEAD DUE TO LOOMING ACA MILESTONES
31%
11%
10%7%
41%(Don’tknow)
In house Payroll vendorEnrollment vendor Other
32%
68%
Subject to Tax Will not hit Tax
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MERCER NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS
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A B O U T M E R C E R ’ S N AT I O N A L S U RV E Y O F E M P L O Y E R - S P O N S O R E D H E A LT H P L A N S
Oldest Marking 30 years of measuring health plan trends
Largest 2,486 employers participated in 2015
Statistically valid Based on a probability sample of private and public employers for reliable results
Includes employers of all sizes, all industries, all regions Results project to all US employers with 10 or more employees
Most comprehensiveExtensive questionnaire covers a full range of health benefit issues and strategies
Employer size groups in presentationSmall: 10-499 employees/Large: 500+ employees/Jumbo: 20,000+ employees
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1 Cost growth moderate, at 3.8% in 2015 with 4.3% projected for 2016But while large employers held increase to 2.9%, small employers saw cost rise 5.9%
2 One in four covered employees is now in a CDHP Consumerism tools are helping employees make the best plan choice
3 Analysis: 25 strategies that helped employers achieve lower cost and trend in 2015Successful practices spanned program design, care delivery, workforce health
4 Consumer empowerment is building, supported by new programs and technology Telemedicine, cost transparency tools, and mobile devices are all on the rise
5New clinical models — ACOs and medical homes — lead the evolution to value-based careCenters of Excellence and narrow networks are first steps for some employers
6
Private exchanges will be used by 6% of large employers for 2017 open enrollment, with rapid growth expected to continue through 2020Employers seek to add choice, ease administration, manage cost, and more easily transition to CDHPs
T H E Y E A R ’ S T O P S T O R I E S
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C O S T R O S E A M O D E R AT E 3 . 8 % I N 2 0 1 5 , W I T H A S I M I L A R I N C R E A S E O F 4 . 3 % P R E D I C T E D F O R 2 0 1 6
Change in total health benefit cost per employee compared to CPI, workers’ earnings
8.0%
-1.1%
2.1%2.5%
0.2%
6.1%
7.3%8.1%
11.2%
14.7%
10.1%
7.5%
6.1% 6.1%6.1%6.3%5.5%
6.9%6.1%
4.1%
2.1%
3.9%3.8%4.3%*
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Annual change in total health benefitcost per employee Workers' earnings
Overall inflation
* 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) 1993-2015; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1993-2015.
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S H A R P E R I N C R E A S E B U T L O W E R P E R - E M P L O Y E E C O S T F O R S M A L L E M P L O Y E R S
$11,635 $11,012 $11,973 $10,395
All employers Employers with10-499 employees
Employers with 500or more employees
Arizona
+3.8%+5.9%
+2.9%
Average total health benefit cost per employee in 2015
+1.5%
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B E H I N D T H E AV E R A G EC O S T I N C R E A S E S VA R I E D W I D E LY B Y E M P L O Y E R I N 2 0 1 5
31%
30%
22%
17%
Increase of more than 10%
No increase incost/decrease
Increase of 1-5%
Increase of 6-10%
36%
18%15%
31%
23%
47%
16%
14%
EMPLOYERS WITH 500+ EMPLOYEES
EMPLOYERS WITH 10-499 EMPLOYEES
EMPLOYERS WITH 20,000+ EMPLOYEES
B A S E D O N E M P L O Y E R S P R O V I D I N G C O S T F O R 2 0 1 4 A N D 2 0 1 5
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11.5%
9.9% 9.3%
7.6% 7.6%6.3%
5.1% 5.2% 5.5% 5.4%
8.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Cost of specialty drugs grew by 22% in 2015 among employers that could report cost separately (49%).
ONE KEY COST DRIVER IN 2015: A JUMP IN PRESCRIPTION DRUG BENEFIT COST
Cost change for prescription drug benefits in primary medical plan for large employers
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A C A I M PA C TW H E N T H E D U S T S E T T L E D F R O M “ P L AY O R PAY ” , E N R O L L M E N T L E V E L S W E R E L A R G E LY U N C H A N G E D
Large Employers
• Only 37% of large employers had to take action to comply with the ACA requirement to offer coverage to all employees working 30+ hours per week — most were in compliance prior to the ACA requirement
• Of those taking action, only about one in five experienced an increase in enrollment as a result (or 8% of all large employers)
• Of those in compliance prior to ACA, 10% made eligibility requirements tougher:
- 5% eliminated coverage for PTEs
- 4% increased hours required for coverage
Threshold for offering coverage to “substantially all” employees rose to 95% as of January 2016 — employers need to consider implications
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A C A I M PA C TE M P L O Y E R S T O O K S T E P S T O R E D U C E E X C I S E TA X E X P O S U R E
Large Employers
• Consumer-directed health plans: 39% added a plan or took steps to build enrollment in existing plan
• Dropping a high-cost plan: 11%
• Plan design changes to shift cost to employees: 19%
• Eliminating health care FSAs: 3%
The delay in the excise tax may slow the pace of change, but employers will continue to take action to manage long-term cost growth
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COST-SHIFTING HAS ACCELERATED IN THE HEALTH REFORM ERA, CHALLENGING EMPLOYERS TO HELP EMPLOYEES MANAGE GROWING FINANCIAL RISK
Average PPO deductible for individual, in-network coverage
$1,113 $1,192
$1,410 $1,452
$1,663 $1,681 $1,738
$511 $565 $587 $666 $684 $785 $833
2009 2010 2011 2012 2013 2014 2015
Small employersLarge employers
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WHAT’S WORKING TO HOLD DOWN COST?
Respondents’ costs were analyzed based on their use of more than 25 cost-management best practices
Plan Design and Delivery Infrastructure
• Contribution for family coverage in primary plan is 20%+ of premium
• PPO in-network deductible is $500+• Offer CDHP• HSA sponsor makes a contribution to
employees’ accounts• Voluntary benefits integrated with core • Mandatory generics or other Rx
strategies• Steer members to specialty
pharmacy for specialty drugs• Reference-based pricing• Data warehousing• Collective purchasing of medical or Rx
benefits• Transparency tool provided by specialty
vendor and/or used by 10% of members• Use private health benefits exchange
Employee Well-being
• Offer optional (paid) well-being programs through plan or vendor
• Provide opportunity to participate in personal/group health challenges
• Offer technology-based well-being resources (apps, devices, web-based)
• Worksite biometric screening• Encourage physical activity at work
(gym, walking trails, standing desks, etc.)
• Use incentives for well-being programs
• Spouses and/or children may participate in programs
• Smoker surcharge• Offer EAP
Care Delivery
• High-performance networks • Surgical centers of excellence• On-site clinic• Telemedicine• Value-based design• Medical homes• Accountable care organizations
24© MERCER 2016
COMPARISON OF EMPLOYERS USING THE MOST VERSUS THE FEWEST BEST PRACTICES AGAIN FINDS DIFFERENCES IN COST AND COST GROWTH
Large Employers
Annual total health benefit cost per employee in 2015
$11,346$11,892
Employers using more than 16 best practices
Employers using fewer than 7 best practices
Change in cost from 2014 to 2015
2.9%3.8%
Analysis based on unweighted cost data from respondents providing cost for both 2014 and 2015.
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PROGRAM DESIGNWHO IS OFFERED WHAT BENEFITS, AND HOW THEY PAY FOR THEM
Plan design offerings and
values
Enrollment/ shopping experience
Core versus voluntary —finding the
balance
Eligibility criteria
Enrollment/ shopping
experience
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OVER A FOURTH OF ALL COVERED EMPLOYEES ARE ENROLLED IN A CONSUMER-DIRECTED HEALTH PLAN
Large Employers
20%23%
32%36%
39%
48%
59%
75%
8% 10%13% 15%
18%
2009 2010 2011 2012 2013 2014 2015 By 2018(projected)
Percent of employers offering CDHPsPercent of covered employees enrolled in CDHPs
23%
28%
By 2018, 75% of large employers expect to offer a CDHP.
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EMPLOYERS SAVE WITH HSA-BASED CDHPsAVERAGE COST WAS MORE THAN 20% LOWER THAN FOR EITHER PPOS OR HMOS IN 2015
Medical plan cost per employee (includes employer contributions to HSA accounts) among large employers
$11,609
$9,921
$12,056
$9,215
PPO PPO with deductible of$1,000 or more
HMO HSA-eligible CDHP
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21%26% 29%
2013 2014 2015
ENROLLMENT IN CDHPs GROWS SLOWLY OVER TIME, AND EMPLOYER ACCOUNT CONTRIBUTION IS CRITICAL
Large employers offering HSA-based CDHPs
Enrollment growth over time% eligible employees choosing HSA-based CDHP when offered w/other medical plans*
Employer HSA fundingaffects enrollment% eligible employees choosing HSA when offered with other medical plans
37%32%
22%
Employer HSAcontribution of $800+
Employer HSAcontribution less
than $500
Employer does notcontribute to HSA
*Among employers offering the plan for three years
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MAJORITY OF LARGE EMPLOYERS EXPECT TO OFFER A CDHP BY 2018 — BUT MOST SEE IT AS AN OPTION, RATHER THAN A FULL REPLACEMENT
17%22%
61%
21%
55%
25%25%
61%
15%
Small employers (10-499 employees)
Large employers (500+ employees)
Jumbo employers (20,000+ employees)
Will offer CDHP along with other medical plan option(s)
Will not offer CDHPWill offer CDHP as the only plan to all or most employees within the
next three years
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18%
26%
55%
55%
67%
74%
To accommodate employee requests
To help employees reduce financial stress/improve financial health
EMPLOYERS USING VOLUNTARY BENEFITS TO FILL GAPS IN CORE BENEFITS
Objectives for program, based on large employers offering VBs
To give employees opportunity to fill gaps in employer-paid benefits
To offer additional benefits at no cost to employer
To maintain employee benefit options as core benefits change
To help drive participation in lower-cost plans
76% of employers with voluntary
benefits say their objectives have
been met
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VOLUNTARY BENEFITSIndividual disability 61%
Accident 59%
Cancer/critical illness 45%
Whole/universal life 43%
Legal benefit 30%
Discount purchase program 26%
Long-term care 25%
Hospital indemnity 21%
Auto/Homeowners 20%
Investment advisory 19%
Telemedicine 18%
ID theft 17%
Pet insurance 10%
EXPANDING EMPLOYEES’ VIEW OF THE WHOLE BENEFIT PACKAGE
Meeting diverse needs without driving up employer costsPe
rcen
t of l
arge
em
ploy
ers
offe
ring
the
bene
fit
32© MERCER 2016
COST TRANSPARENCY TOOLS
Percentage of employers that contract with a specialty vendor outside the health plan to provide transparency tool
12%15%
13%15%
24%22%
2014 2015 Considering
All large employers
Employers with 20,000+employees
Among large employers who provide transparency tools:• 13% provide incentives to encourage employees to use them• 27% track utilization. Of those, about 1 in 5 report utilization of 20%
or more, but nearly half report utilization of less than 5%
33© MERCER 2016
C A R E D E L I V E R YH O W A N D W H E R E A M E M B E R A C C E S S E S C A R E
Value-based care that seeks to
rationalize provider incentives
New care settings that give consumers
convenient, cost-effective
options
Innovative tools that empower the consumer
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TELEMEDICINE IS THE FASTEST GROWING TREND IN CARE DELIVERY
11%18%
30%35%
18%
34%
44% 44%
2013 2014 2015 Considering
All large employers
Employers with 20,000+employees
Among large employers offering telemedicine:• 26% reported a utilization rate of 5% or higher in 2014• 47% agree that the telemedicine program has met their
objectives• 85% say that the most important reason for offering telemedicine
is to provide employees with a more affordable, convenient source of care
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USE OF ACCOUNTABLE CARE ORGANIZATIONS (ACOs) IS RISING, BUT COST IMPACT NOT CLEAR TO MOST
10% 10%13%
29%25%
33% 34%
43%
2013 2014 2015 Considering
All large employers
Employers with 20,000+employees
Among employers with 5,000+ employees offering ACOs*:• 80% offer an ACO as a standard health plan offering• 28% actively encourage members to seek care from the ACO• 16% report some cost savings achieved with the ACO; most
can’t measure
*Results from supplemental survey of employers with 5,000 or more employees
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TELEMEDICINE IS THE FASTEST GROWING TREND IN CARE DELIVERY
11%18%
30%35%
18%
34%
44% 44%
2013 2014 2015 Considering
All large employers
Employers with 20,000+employees
Among large employers offering telemedicine:• 26% reported a utilization rate of 5% or higher in 2014• 47% agree that the telemedicine program has met their
objectives• 85% say that the most important reason for offering telemedicine
is to provide employees with a more affordable, convenient source of care
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USE OF ACCOUNTABLE CARE ORGANIZATIONS (ACOs) IS RISING, BUT COST IMPACT NOT CLEAR TO MOST
10% 10%13%
29%25%
33% 34%
43%
2013 2014 2015 Considering
All large employers
Employers with 20,000+employees
Among employers with 5,000+ employees offering ACOs*:• 80% offer an ACO as a standard health plan offering• 28% actively encourage members to seek care from the ACO• 16% report some cost savings achieved with the ACO; most
can’t measure
*Results from supplemental survey of employers with 5,000 or more employees
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GROWTH IN USE OF “CENTERS OF EXCELLENCE” AMONG LARGEST EMPLOYERS
22% 24% 25% 24%
37%41%
48%
35%
2013 2014 2015 Considering
All large employers
Employers with 20,000+ employees
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TYPES OF COEs CURRENTLY USED OR BEING CONSIDERED
76%
39%
18% 17%
51%
31%
14%
27%19%
26% 23%
34%
Transplants Cancer Women's health(infertility,
pregnancy)
Neonatal care Bariatric Surgery otherthan transplants
Currently use
Considering
Among employers with 5,000+ employees offering COEs*:
• 79% say they are likely to expand COE use in the future
*Results from supplemental survey of employers with 5,000 or more employees
40© MERCER 2016
MEDICAL HOMES GROWING MORE SLOWLY, BUT THE LARGEST EMPLOYERS SHOW STRONG INTEREST
5%7% 7%
17%13%
20% 21%
30%
2013 2014 2015 Considering
All large employers
Employers with 20,000+employees
Among employers with 5,000+ employees offering patient-centered medical homes*:• 33% actively encourage members to seek care from a
medical home• 81% report that the amount of savings achieved from using
medical homes is not known
*Results from supplemental survey of employers with 5,000 or more employees
41© MERCER 2016
WORKFORCE HEALTHHOW AN EMPLOYER INFLUENCES BEHAVIOR, HEALTH AND WELL-BEING
Three pillars of well-being:
physical, emotional, financial
Physical environment can make the healthy choice the easy
choice
Activity trackers, mobile apps bring health
consciousness into daily life
Culture of health and social
connections key to building intrinsic
motivation
Employers starting to measure
well-being VOI as well as ROI
42© MERCER 2016© MERCER 2016
HEALTH ADVOCACY IS INCREASINGLY RECOGNIZED AS A CRITICAL RESOURCE IN A COMPLEX HEALTH CARE SYSTEM
Percent of large employers offering program
79%68%
40%32%
0%
52%
80%77% 71%
36% 39% 42%56%
83%
2014 2015
Phone/web health coaching
Face-to-face health coaching
Sleep disorder treatment
Resiliency/stress management
program
Disease management
Health advocate
Health assessment
NA
Addressing the continuum of health needs
43© MERCER 2016
31%
29%
26%
27%
59%
Financial calculators to assist with managing personal/family expenses
Tools or resources for retirement planning
Financial planning tools for budgeting or debt management
RESOURCES TO HELP EMPLOYEES IMPROVE THEIR FINANCIAL HEALTH
Large Employers
Other financial resources
No financial resources provided
44© MERCER 2016© MERCER 2016
INNOVATIVE TECHNOLOGIES AND ACTIVITIES FOR A MORE ENGAGING MEMBER EXPERIENCE
A C T I V I T I E S
All large Employers
Employers with 20,000+ Employees
Worksite biometric screening event 56% 71%
Business unit/location group challenges 45% 57%
Onsite exercise or yoga classes or weight loss programs (such as Weight Watchers)
43% 76%
Personal challenges 40% 55%
Peer-to-peer support 19% 33%
T E C H N O L O G Y- B A S E D R E S O U R C E S
All large Employers
Employers with 20,000+ Employees
Mobile apps 30% 44%
Wearables/apps to monitor activity 24% 38%
Devices to transmit health measures to providers 4% 11%
Onsite kiosks 7% 12%
Other web-based resources/tools 40% 63%
45© MERCER 2016© MERCER 2016
BUILDING A CULTURE OF HEALTHSIX POLICIES THAT PROMOTE EMPLOYEE WELL-BEING
Large Employers
15%
21%
34%
45%
58%
68%Support healthy-eating choices
Tobacco-free workplace
Work environment explicitly encourages physical activity
Support work-life balance (with flex-time, job share, etc.)
Employees may take work time for physical activity, stress relief
Promote responsible alcohol use
1
2
3
4
5
6
46© MERCER 2016© MERCER 2016
EMPLOYERS USE FINANCIAL INCENTIVES TO DRIVE PARTICIPATION RATES IN KEY PROGRAMS
Large Employers
Large employers using incentives report higher
participation rates.
48%
20%
52%
26%
12%22%
Large employers offering incentives
Large employers not offering incentives
Health assessment completion rate
Lifestyle management program participation rate*
Validated biometric screening rate
54%
40%27%
Healthassessment
Validatedbiometricscreening
Lifestylecoaching
Offer incentives (among employers with programs)
Including spouses builds engagement:• 62% of employers make key
elements of program available to spouses (up from 56% in 2014)
• Half of those make spouses eligible for incentives
*Average % of identified persons actively engaged in program
47© MERCER 2016© MERCER 2016
12%15% 17%
21% 22%24%
37% 38%
46% 44%
2011 2012 2013 2014 2015
All large employers
Employers with 20,000+employees
EMPLOYERS MAY BE COOLING ON TOBACCO-USE INCENTIVES IN WAKE OF REGULATORY QUESTIONS
Offer lower premium contributions to non-tobacco users
Median reduction in annual premium: $500
48© MERCER 2016© MERCER 2016
CONSIDERING “VALUE OF INVESTMENT” (VOI) AS WELL AS ROI MEANS DEVELOPING NEW METRICS
Employers with 20,000 or more employees
44%56%
Over two-fifths have attempted to measure program impact…
Have measured
VOI
17%
25%
25%
26%
44%
66%Positive impact on medical cost trend
Improved productivity
No positive impact was found so far
…with the majority of these reporting improvement in medical plan trend and/or other areas
Improved attraction and retention
Positive impact on disability cost trend
Improved employee satisfaction
49© MERCER 2016© MERCER 2016
PRIVATE HEALTH BENEFIT EXCHANGES GAIN A FOOTHOLD AS INTEREST CONTINUES TO BUILD
Large Employers
4% 4%
13%
6%8%
15%
27%24%
17%
For active employees For pre-Medicare-eligible retirees* For Medicare-eligible retirees*
Use nowUse now / planned for 2017Considering using within 5 years
* Among current retiree medical plan sponsors
50© MERCER 2016© MERCER 2016
MERCER MARKETPLACE FOOTPRINTUNSURPASSED GROWTH
51© MERCER 2016© MERCER 2016
MERCER MARKETPLACEAVERAGE SAVINGS RESULTS
9%
Cost Levers
1.6% 56%
Average Year 1EmployerSavings
AverageYear 2 and 3
Cost Increase
Employees Enrolled in
High DeductiblePlans versus 25%National Average
More Informed Employees
Purchasing Power
Breadth of Carrier andNetwork Offerings
Defined Contribution
Wellness and ImprovedCare Management
Buying Coalitions
$975
Average Year 1Per Enrolled
Employee Savings
9% 1.6%$975
52© MERCER 2016
56% OF EMPLOYEES ARE ELECTING HIGH DEDUCTIBLE PLANS
3%
15%
25%
26%
26%
4%
$0 deductible plan
$350 deductible plan
$800 deductible plan
$1,500 or $1,850 deductible plan
$2,500 or $2,850 deductible plan
$4,500 or $6,550 deductible plan
53© MERCER 2016
ABOUT ONE THIRD OF EMPLOYERS ARE USING A DEFINED CONTRIBUTION STRATEGY
Employer subsidy strategies in place as of January 2016
70%
30%
Defined Benefit Defined Contribution
Defined contribution amounts provided by employers often vary within their population.
Most common differences are:
• Family tier
• Employee salary
• Employee category
54© MERCER 2016
SUPPLEMENTAL HEALTH COVERAGE SUPPORTS CONSUMER PURCHASE OF HIGHER-DEDUCTIBLE PLANS
Summary of January 2016 elections. Percentages represent the prevalence of election within the supplemental health policies.
44%
26%
30%
Supplemental Health Purchases
Accident Hospital Indemnity Critical Illness
36% of employees enrolled in an $800 or greater deductible medical plan also purchase at least one supplemental health policy.
55© MERCER 2016© MERCER 2016
GIVEN HOW STRONGLY EMPLOYEES VALUE HEALTH BENEFITS, EVEN SMALL EMPLOYERS PLAN TO STAY IN THE GAME
Percent of employers that say they are “very likely” or “likely” to terminate plans within the next five years
21%
6%
15%
4%7%
5%
201320142015
Employers with 50-499 employees
Employers with 500 or more employees
56© MERCER 2016