Mercer: U.S. employer-sponsored health benefit costs rise 2.6% in 2017

AVERAGE TOTAL COST for employer-sponsored health benefits rose 2.6 percent in 2017 according to the Mercer National Survey of Employer-Sponsored Health Plans. / COURTESY MERCER
AVERAGE TOTAL COST for employer-sponsored health benefits rose 2.6 percent in 2017 accrding to the Mercer Nationa Survey of Employer-Sponsored Health Plans. / COURTESY MERCER

PROVIDENCE – The average total health benefit cost per employee for company-sponsored health plans in the United States rose 2.6 percent in 2017 according to the Mercer National Survey of Employer-Sponsored Health Plans, released Thursday.

Over the past five years, the study said, health plan costs have risen an average of 3.3 percent annually, which Mercer framed in contrast to more rapidly rising individual rates in 2017. Mercer also noted that in the previous five-year period, health plan costs had risen 6.2 percent annually. In addition to the relatively low increase in health plan costs, the report said that the modest 3.3 percent growth was surprising in light of low new migration of employees to high-deductible plans that generally are lower cost alternatives.

In 2017, total health benefits cost averaged $12,229 per employee for all companies. For employers with 500 or more employees, the average total health benefit cost was $12,615, a 2.7 percent increase year over year. For business with 10 to 499 employees, health benefit cost averaged $11,527 per employee, a 2.3 percent increase year over year.

Cost increases were not limited to employers, however, as the survey showed that in 2017, employees paid 24 percent of total cost of coverage through paycheck deductions, on average.

- Advertisement -

“The high cost of health care poses major challenges to employers and their employees,” said Sharon Cunninghis, who leads Mercer’s Health business in the United States. “We’re helping employers gain ground on some of their biggest cost drivers by such means as addressing chronic conditions with enhanced care management, and targeting double-digit spending growth on specialty drugs with a suite of pharmacy solutions. When you reduce cost by improving quality, that’s a win-win.”

The Mercer survey results showed that deductibles for PPO plans continued to rise in 2017, reaching an average of $1,000 for employers with 500 or more employees and up to $2,000 for companies with 10-499 employees.

Enrollment in low-cost, high deductible consumer-directed health plans, or CDHPs, increased 1 percentage point to 30 percent in 2017. These CDHPs are paired with Health Savings Accounts.

Mercer said that often, employers offer CDHPs alongside higher cost plans with more benefits.

“Most employers want to give employees choices. For many employees, enrolling in a high-deductible plan with an HSA is a smart financial move, but it takes some education,” said Liz Spath, a health care benefits consultant in Mercer’s Boston office. “Decision-support models and other resources can help employees reach that comfort level, and most employers would rather go that route than take away other plan choices.”

Survey results showed that 82 percent of company respondents with over 500 employees offered a “transparency tool” to help employees compare cost quality of health plans. For companies with more than 500 employees it was reported that 71 percent offer telemedicine services, which offer lower costs than a typical office visit.

Mercer also said that prescription drug cost has pushed an increase in health plan costs for both employers and employees. The survey said that drug benefit cost is rising approximately 8 percent annually among employers with 500 or more employees, largely driven by a 15 percent increase of spending on specialty drugs.

The study also noted that larger companies have been trending toward providing employees with financial incentives to seek out more cost-effective avenues of care such as accountable care organizations, centers for excellence, and patient-centered medical homes and health care delivery systems.

The survey reported that 49 percent of companies with 500 or more employees offer health advocacy services and navigators to assist to find a health care provider, compare costs and resolve claim problems.

“While it’s hard to say how much these initiatives, taken together, have contributed to the slowdown in cost growth nationally, the fact that individual employers are seeing positive results is encouraging,” said Spath. “Consumerism has an important role, but it can’t solve for all of the inefficiencies in the health care market. Getting more value for the health care dollar is the common thread in these new strategies.”

Nearly 2,500 employers participated in the 2017 survey, according to Mercer, representing, “about 600,000 employers and nearly 100 million full- and part-time employees.”

Chris Bergenheim is the PBN web editor.

No posts to display