Group Health Benefits: What to Expect in 2017 and How to Gauge Plan Affordability

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According to a recent survey by National Business Group on Health, large employers in the U.S. are pretty sure that the cost of health benefits is going to keep rising at around 6 percent next year. Good news, right? Health insurance premiums sold on the public exchange are going up in double digits across the country, averaging a minimum increase of 10 percent nationwide. Six percent’s not too shabby when you look at it that way.

“This is a clear indication that the employer-based health care model continues to be the most effective way to provide health insurance coverage to employees and their families,” said Brian Marcotte, the president and CEO of NBGH. The cost of employer-sponsored coverage is “considerably lower” than a plan purchased by an individual through the ACA marketplace, said Bloomberg contributor Kristen Ricaurte Knebel

That doesn’t mean all’s well, though. The 5 to 6 percent increase in the cost of group health benefits is “more than twice the rate of inflation and general wage increases,” Marcotte said. Sure, six is less than ten – but unsustainable is unsustainable, and according to Marcotte, these increases “are both unsustainable and unacceptable.”

The rising cost of group health benefits threatens affordability

Huge rate increases are a serious issue, not only from a business perspective but for public health as well. While employees are not expected to bear the brunt of rate increases in 2017, the trajectory does not look good for anyone in the long-term.

With employer-sponsored group benefit plans being the “most efficient and effective” source of health coverage for most people, unsustainable rates are bound to catch up with the public eventually. When the most efficient means of getting coverage becomes ineffective and unaffordable, what then?

How are employers responding?

“Employers are shifting their focus from how they design their health plans to how the group benefits they offer are delivered,” said Knebel

For example, 90 percent of the employers that NBGH surveyed are moving toward telemedicine, which reduces the cost of care – but which, Marcotte said, was never intended to replace traditional benefits. Other strategies include an increase in consumer-directed health plans, a leveling-off of spousal surcharges, and more tools to manage care.

Yet while employers struggle to trim costs, pharmaceutical spending continues to bloom like a bad case of algae. “According to the survey, nearly a third of respondents (31%) indicated specialty pharmacy was the highest driver of health costs. That compares with only 6% who cited specialty pharmacy as the number one driver in 2014. Overall, 80% of employers placed specialty pharmacy as one of the top three highest cost drivers,” reported NBGH.

Are you paying too much for group health benefits?

To help you answer that question, we’ve created a handy flier identifying two of the most overlooked cost drivers that could be inflating your bill: overpayment for medical services, and neglecting to shop before you buy. In addition, this sheet links you to a free cost-savings calculator so you can gauge the effectiveness of your current plan and determine IF you could be saving more by applying BeaconPath’s methodology. Curious? You should be. Click here to instantly test the affordability of your plan using our proprietary calculator.

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