According to the findings of a new employer health care survey conducted by Towers Watson/National Business Group, most large employers will continue to offer health care benefits once the health insurance exchanges are in place in 2014, but are less confident that they will do so a decade from now. The survey – Health Employer Survey on Purchasing Value in Health Care (pdf) –  includes responses provided by 512 employers with 1,000 or more employees in all major industry sectors. Survey responses about employer health benefit practices and strategies for containing costs were given between December 2011 and January 2012. The survey as a whole provides some insight into how large employers are addressing both rising health care costs and the changes made by the Affordable Care Act.

The report shows that employer health care costs continue to rise. Last year, employers spent an average of $10,982 per employee on health care. In 2012, this per-employee average is expected to reach $11,664, a 6.2% increase. To combat this cost increase, employers are being more proactive and aggressive in their health care management activities, the survey finds. Such steps include adjusting plan designs and using incentives to improve provider quality, promoting the use of employee health management programs, and increasing enrollment of account-based health plans (ABHPs).

Notable survey findings include the following:

• Between 2011 and 2012, the employees’ share of premium costs increased from an average of $2,529 to $2,764, or 9.3%. Out-of-pocket expenses increased as well, from 16% to 18%. The survey attributes much of this rise to increased employee contributions in tiers with dependent coverage, as well as spousal surcharges, which about 24% of companies are using.
• Only 3% of responding employers claimed that they would be “somewhat” or “very likely” to discontinue their provision of health insurance benefits for active employees in 2014 or 2015. In contrast, only 23% are “very confident” that they will continue to provide health benefits 10 years from now. However, 45% are somewhat to very likely to offer an employer-sponsored health plan to only a portion of their population and direct ineligible employees to the insurance exchanges.
• The provision of employer subsidies for retirees with health accounts is projected to decline. The implementation of the insurance exchanges along with changes to Medicare will cause many employers to change their policies toward retiree medical plans, although few will drop sponsorship of retiree medical programs for active employees entirely. According to the survey, 8% of employers with retiree medical programs plan to make changes to their subsidy in 2013. This number jumps to 20% for the years 2014 or 2015.
• The increased popularity of account-based health plans (ABHPs) is a trend that will continue. The survey defines an ABHP as a plan with a deductible offered together with a personal account (i.e., health savings account (HSA) or health reimbursement arrangement) that can be used to pay a portion of the medical expense not paid by the plan. The survey reports that ABHP enrollment has increased from 15% to 27% in the past two years. A total of 59% of surveyed employers have an ABHP in place, while 11% more intend to add one by the year 2013.
• Approximately 40% of employers that responded consider the use of HSAs as part of their retiree strategy. By the year 2015, another 20% of employers claim they will include HSAs as part of their retiree strategy.
• Employers are increasing their use of employee wellness programs and other incentives as a means of improving overall health and decreasing health care costs. The survey claims that employee health habits remains “the top challenge employers face in managing their health care costs.” Two-thirds of survey respondents claimed that they currently use financial incentives to participate in health management programs, while 32% claimed they plan to adopt or expand such incentives. Approximately 20% of employers claimed that they also use penalties in their programs, while 10% have also adopted achievement standards.
• Approximately 30% of surveyed companies stated that they are taking steps to “examine their health care benefits, employee subsidies and out-of-pocket costs (including health management, and worksite and prevention programs) in a total rewards framework” for different pay groups. According to the report, those employers “that are currently conducting this kind of comprehensive analysis — factoring in broader cost and talent implications — will no doubt have an advantage over their competitors as the economy improves and the implementation of health care reform becomes clearer.”

A copy of the complete report can be accessed here.

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