More employers look toward value-based insurance plans
Employers feel they've squeezed out all of the savings that can come from high-deductible health plans and are seeking new ways to manage rising healthcare costs and improve employee health, according to a new report by Duke's Margolis Center for Health Policy.
Finding new ways to bend the cost curve isn't easy. That’s especially true since most businesses don't have healthcare industry knowledge or resources to launch new models, according to the report.
Instead, most employers are relying on third parties to manage population health and provide care for people with chronic diseases. They're also getting help to create payment reforms, identify high-value providers and help employees navigate healthcare, researchers said.
Nearly half of all insured Americans have employer-sponsored health insurance. That market share means employer-sponsored insurance can impact healthcare costs more than individual insurance or the Affordable Care Act exchanges. However, the market includes businesses with different finances, sizes and locations. Employer-sponsored insurance may have trouble leading an effort to transform care because there are so many players with different needs.
Over the past decade, employers have tried to contain healthcare costs through cost-sharing efforts, such as high-deductible health plans. These efforts have helped keep costs for the companies under control. Mercer's recent National Survey of Employer-sponsored Health Plans found that costs have increased just 3% annually since 2012. That relatively modest increase followed a decade of 6% or more yearly increases.
But it's not all positive news for employers. That same report found that about one-third of smaller employers faced double-digit health insurance increases in 2017. Plus, there's only so much cost-shifting employers can do before it begins to negatively affect employee healthcare.
High-deductible plans are supposed to shift costs, improve patient education and reduce unnecessary or low-value care. However, rather than take on the added costs, some consumers may avoid necessary care, which could result in higher healthcare costs down the road.
High-deductible health plans also haven't tempted people to become better healthcare consumers. In fact, a recent HSA Bank survey found that 10% of human resources executives interviewed aren't confident that employees understand their health insurance options. Another 75% were "somewhat confident" and only 15% said they were "very confident" that employees understand their options.
This has led to more employers, including big names like Walmart, Apple and Boeing, working directly with providers and sidestepping insurance companies altogether.
The new report, which was supported by the Robert Wood Johnson Foundation, found that many employers are relying on third parties to help improve value. But those efforts are limited by finances, implementation issues and navigating change management.
There is a positive, though. Despite potential obstacles for employers, businesses face fewer regulations than public plans. This means the employer market will play an important role in developing new technologies, according to the report. However, it cautions that "questions remain as to how this sector will evolve as competition increases."
"As innovation continues, special attention should be paid to identifying high-value local providers and standardizing quality metrics to help ensure the industry can continue to grow. With almost half of Americans insured by their employer, innovation in this environment is critical for innovation across the healthcare sector," the report said.
- Duke’s Margolis Center for Health Policy Value Innovations by Employers: Examples Beyond Cost Sharing
- Healthcare Dive More employers go direct to providers, sidestepping payers