As we head toward the end of 2014, most businesses are estimating their costs and budgeting for 2015. Upstate New York employers estimated their health-benefit cost per employee would rise 10.1 percent next year, on average, if they made no changes to their current health-care plan. And, they expect to hold their cost increase to […]
As we head toward the end of 2014, most businesses are estimating their costs and budgeting for 2015. Upstate New York employers estimated their health-benefit cost per employee would rise 10.1 percent next year, on average, if they made no changes to their current health-care plan.
And, they expect to hold their cost increase to 6.4 percent, on average, by making changes to health-plan design and/or plan vendors.
Those estimates are according to the “National Survey of Employer-Sponsored Health Plans,” that Mercer, a health-care consultant, conducts annually.
Mercer is a wholly owned subsidiary of New York City–based Marsh & McLennan Companies (NYSE: MMC).
The results for upstate New York represent the responses of 46 local employers.
Employers nationwide predict that in 2015 their health-benefit cost per employee will rise 4.6 percent, on average, according to a news release Mercer posted to its website on Nov. 19.
This increase reflects changes employers will make to reduce cost. If they made no changes to their current plans, they estimate that the cost would rise by an average of 7.1 percent.
The same survey found the average per-employee cost of health benefits for companies nationwide rose nearly 4 percent in 2014.
The figure represents a bigger increase than last year’s “historically low” increase, but it is still well below the 7 percent average rate of growth over the past 15 years, Mercer said.
The total health-benefit cost averaged more than $11,200 per employee in 2014, according to the Mercer survey.
At the same time, the total health-benefit cost for active employees in upstate New York increased 4.3 percent in 2014, to an average of $10,739 per employee.
Consultant view
The cost per employee for upstate respondents is still lower than the figures seen nationally, says Thomas Flynn, Mercer’s health and benefits leader for Upstate.
“Even though we’re in … communities where you would expect the health care to be above-average, cutting edge, maybe a little bit more expensive, we’re still lower than most,” says Flynn.
When asked about the expected higher percentage rise in cost-per-employee, Flynn notes that businesses in other parts of the country were “way ahead” of upstate firms in increasing deductibles and moving away from co-pay-based health plans.
“We still like our co-pays and we still like to have a relatively rich plan that keeps our employees confident [and] comfortable,” he adds.
Flynn contends that upstate New York is still “closer to the HMO [health-maintenance organization] community than most places in the country.”
Many employers anticipate spending more to cover more employees in 2015 as the Affordable Care Act (ACA) provision goes into effect requiring employers to extend coverage to substantially all employees working 30 or more hours per week.
“By and large, it’s business as usual,” Flynn said when asked if any of his upstate clients were taking any steps to limit the number of workers reaching the hourly threshold.
Companies will need to adjust, he says, especially for variable-hour employees, where the provision gets “complex.”
He describes variable-hour employees as those who don’t work full- or part-time hours all the time.
“I think what employers have done both locally and nationally is try to get a little more disciplined on managing that population, so that they don’t have someone that bubbles up and meets that 30-hour provision and before they weren’t,” he says.
The survey asked employers how likely they are to terminate their medical plans within the next five years and send employees to a public health exchange to seek coverage.
The survey found 8 percent of upstate New York respondents say they are likely or very likely to do so.
Nationally, 4 percent of large employers and 15 percent of small employers (50-499 employees) say they are likely or very likely to terminate their plans within five years.
Other 2014 upstate findings
The Mercer survey found 46 percent of upstate respondents offered a high-deductible consumer-directed health plan (CDHP) with an account feature (an HSA or HRA) in 2014.
HSA is short for health-savings account and HRA is short for health-reimbursement account.
When asked to think ahead three years, 63 percent said they expect their organization will offer a CDHP in 2017.
Several Mercer clients were evaluating CDHPs during 2013 and appeared to include them in their plan offerings.
“This was the year that people started to make those decisions to have a high-deductible plan at least in their offering because they need to make sure that they have the affordable option,” says Flynn.
The Affordable Care Act says employer-offered health insurance is not affordable if the purchase cost for coverage is more than 9.5 percent of an employee’s wage income.
The Mercer survey also found that 67 percent of all employees covered in respondents’ health plans are enrolled in PPO/POS plans, 13 percent in HMOs, and 21 percent in CDHPs.
PPO is short for preferred-provider organization, while POS is short for point of service.
The average employee contribution amount for employee-only coverage is $142 monthly for a PPO/POS plan, and $74 monthly for a CDHP.
Mercer conducts its National Survey of Employer-Sponsored Health Plans using a national probability sample of public and private employers with at least 10 employees, and 2,569 employers completed the 2014 survey.
The firm conducted the survey during the late summer, when most employers have a “good fix” on their costs for the current year. Results represent about 600,000 employers and nearly 100 million full- and part-time employees.
The error range is 3 percent, Mercer says.
Contact Reinhardt at ereinhardt@cnybj.com