MERCER’S NATIONAL SURVEY OF EMPLOYER … FILES/2016 Programs/Mercer Survey...Mercer’s National Survey of Employer-Sponsored Health Plans 2015 2 THE YEAR’S TOP STORIES Mercer’s

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H E A L T H W E A L T H C A R E E R

M E R C E R ’ SN A T I O NA L S U R V E Y O FE M P L O Y E R - S P O N S O R E DH E A L T H P L A N S 2 0 1 5Presentation for WACABA

March 17, 2016

George LanePrincipalMercer

1Mercer’s National Survey of Employer-Sponsored Health Plans 2015

A B O U T M E R C E R ’ S N A T I O N A L S U R V E Y O FE M P L O Y E R - S P O N S O R E D H E A L T H P L A N S

Employer size groups in presentationSmall: 10-499 employees/Large: 500+ employees/Jumbo: 20,000+ employees

OldestMarking 30 years of measuring health plan trends

Largest2,486 employers participated in 2015

Most comprehensiveExtensive questionnaire covers a full range of health benefit issues and strategies

Statistically validBased on a probability sample of private and public employers for reliable results

Includes employers of all sizes, all industries, all regionsResults project to all US employers with 10 or more employees


T H E Y E A R ’ S T O P S T O R I E S

Mercer’s National Survey of Employer-Sponsored Health Plans

Analysis: 25 strategies thathelped employers achieve lowercost and trend in 2015Successful practices spannedprogram design, care delivery,workforce health

3

Private exchanges will be usedby 6% of large employers for 2017open enrollment, with rapid growthexpected to continue through 2020Employers seek to add choice, easeadministration, manage cost, and moreeasily transition to CDHPs

6

Cost growth moderate, at 3.8%in 2015 with 4.3% projected for 2016But while large employers heldincrease to 2.9%, small employerssaw cost rise 5.9%

1

One in four coveredemployees is now in a CDHPConsumerism tools are helpingemployees make the best plan choice.

2

Consumer empowerment isbuilding, supported by newprograms and technologyTelemedicine, cost transparencytools and mobile devices are allon the rise.

4

New clinical models—ACOsand medical homes—lead theevolution to value-based careCenters of Excellence andnarrow networks are first stepsfor some employers

5


C O S T R O S E A M O D E R AT E 3 . 8 % I N 2 0 1 5 , W I T H AS I M I L A R I N C R E A S E O F 4 . 3 % P R E D I C T E D F O R 2 0 1 6

Change in total health benefit cost per employee compared to CPI, workers’ earnings

8.0%

-1.1%

2.1%2.5%

0.2%

6.1%7.3%

8.1%

11.2%

14.7%

10.1%

7.5%

6.1% 6.1%6.1%6.3%5.5%

6.9%6.1%

4.1%

2.1%

3.9%3.8%4.3%*

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Annual change in total health benefitcost per employee Workers' earnings

Overall inflation

* ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation(April to April) 1993-2015; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1993-2015.


S H A R P E R I N C R E A S E B U T L O W E R P E R - E M P L O Y E E C O S TF O R S M A L L E M P L O Y E R S

Average total health benefit cost per employee in 2015

$11,635 $11,012$11,973

All employers Employers with 10-499employees

Employers with 500 or moreemployees

+3.8% +5.9%+2.9%


B E H I N D T H E AV E R A G E : C O S T I N C R E A S E S VA R I E DW I D E LY B Y E M P L O Y E R I N 2 0 1 5

Based on employers providing cost for 2014 and 2015

31%

30%

22%

17%

Increase of morethan 10% No increase

in cost /decrease

Increaseof 1-5%

Increaseof 6-10%

Employers with 500+ employees36%

18%15%

31%

Employers with 10-499employees

23%

47%

16%

14%

Employers with 20,000+employees


11.5%

9.9%9.3%

7.6% 7.6%6.3%

5.1% 5.2% 5.5% 5.4%

8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cost of specialty drugs grewby 22% in 2015 among employersthat could report cost separately (49%).

O N E K E Y C O S T D R I V E R I N 2 0 1 5 : A J U M P I NP R E S C R I P T I O N D R U G B E N E F I T C O S T

Cost change for prescription drug benefits in primary medical plan for large employers

7


A C A I M PA C T: W H E N T H E D U S T S E T T L E D F R O M “ P L AY O RPAY ” , E N R O L L M E N T L E V E L S W E R E L A R G E LYU N C H A N G E D

Large employers

• Only 37% of large employers had to take action to comply with the ACArequirement to offer coverage to all employees working 30+ hours perweek – most were in compliance prior to the ACA requirement.

• Of those taking action, only about one in five experienced an increase inenrollment as a result (or 8% of all large employers).

• Of those in compliance prior to ACA, 10% made eligibility requirements tougher:

- 5% eliminated coverage for PTEs

- 4% increased hours required for coverage

Threshold for offering coverage to “substantially all”employees rose to 95% as of January 2016 –

employers need to consider implications


A C A I M PA C T: E M P L O Y E R S T O O K S T E P S T O R E D U C EE X C I S E TA X E X P O S U R E

Large employers

• Consumer-directed health plans: 39% added a plan or took steps tobuild enrollment in existing plan

• Dropping a high-cost plan: 11%

• Plan design changes to shift cost to employees: 19%

• Eliminating health care FSAs: 3%

The delay in the excise tax may slow the pace of change, butemployers will continue to take action to manage long-term cost growth


$1,113$1,192

$1,410 $1,452

$1,663 $1,681 $1,738

$511 $565 $587$666 $684

$785 $833

2009 2010 2011 2012 2013 2014 2015

Small employersLarge employers

C O S T - S H I F T I N G H A S A C C E L E R A T E D I N T H E H E A L T HR E F O R M E R A , C H A L L E N G I N G E M P L O Y E R S T O H E L PE M P L O Y E E S M A N A G E G R O W I N G F I N A N C I A L R I S K

Average PPO deductible for individual, in-network coverage

Small employers: deductibles have risen 46% since 2010

Large employers: deductibles have risen 47% since 2010


W H A T ’ S W O R K I N G T O H O L D D O W N C O S T ?

Respondents’ costs were analyzed based on their use of more than 25 cost-management best practices

Plan design and delivery infrastructure

• Contribution for family coverage inprimary plan is 20%+ of premium

• PPO in-network deductible is $500+

• Offer CDHP

• HSA sponsor makes a contribution toemployees’ accounts

• Voluntary benefits integrated with core

• Mandatory generics or other Rxstrategies

• Steer members to specialtypharmacy for specialty drugs

• Reference-based pricing

• Data warehousing

• Collective purchasing of medical or Rxbenefits

• Transparency tool provided by specialtyvendor and/or used by 10% of members

• Use private health benefits exchange

Employee well-being

• Offer optional (paid) well-beingprograms through plan or vendor

• Provide opportunity to participate inpersonal/group health challenges

• Offer technology-based well-beingresources (apps, devices, web-based)

• Worksite biometric screening

• Encourage physical activity at work(gym, walking trails, standing desks,etc.)

• Use incentives for well-beingprograms

• Spouses and/or children mayparticipate in programs

• Smoker surcharge

• Offer EAP

Care delivery

• High-performance networks

• Surgical centers of excellence

• On-site clinic

• Telemedicine

• Value-based design

• Medical homes

• Accountable care organizations


C O M P A R I S O N O F E M P L O Y E R S U S I N G T H E M O S T V S .T H E F E W E S T B E S T P R A C T I C E S A G A I N F I N D SD I F F E R E N C E S I N C O S T A N D C O S T G R O W T H

Large employers

Annual total health benefit costper employee in 2015

$11,346$11,892

Employers using morethan 16 best practices

Employers using fewerthan 7 best practices

Change in cost from2014 to 2015

2.9%

3.8%

*Analysis based on unweighted cost data from respondents providing cost for both 2014 and 2015.


P R O G R A M D E S I G N : W H O I S O F F E R E D W H A TB E N E F I T S , A N D H O W T H E Y P A Y F O R T H E M

Plan designofferings – and

values

Eligibilitycriteria

Enrollment/shopping

experience

Core versusvoluntary – finding

the balance

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O V E R A F O U R T H O F A L L C O V E R E D E M P L O Y E E S A R EE N R O L L E D I N A C O N S U M E R - D I R E C T E D H E A L T H P L A N

Large employers

20%23%

32%36%

39%

48%

59%

75%

8% 10%13% 15%

18%

2009 2010 2011 2012 2013 2014 2015 By 2018(projected)

Percent of employers offering CDHPsPercent of covered employees enrolled in CDHPs

23%

28%

By 2018, 75% of large employers expect to offer a CDHP

15

E M P L O Y E R S S A V E W I T H H S A - B A S E D C D H P s :A V E R A G E C O S T W A S M O R E T H A N 2 0 % L O W E R T H A NF O R E I T H E R P P O s O R H M O s I N 2 0 1 5

Medical plan cost per employee (includes employer contributions to HSA accounts)among large employers

$11,609

$9,921

$12,056

$9,215

PPO PPO with deductibleof $1,000 or more

HMO HSA-eligible CDHP

16

21%26%

29%

2013 2014 2015

E N R O L L M E N T I N C D H P s G R O W S S L O W L Y O V E R T I M E ,A N D E M P L O Y E R A C C O U N T C O N T R I B U T I O N I S C R I T I C A L

Large employers offering HSA-based CDHPs

Enrollment growth over time% eligible employees choosing HSA-basedCDHP when offered w/other medical plans*

Employer HSA fundingaffects enrollment% eligible employees choosing HSAwhen offered with other medical plans

37%32%

22%

Employer HSAcontribution of $800+

Employer HSAcontribution less than

$500

Employer does notcontribute to HSA

*Among employers offering the plan for three years

17

M A J O R I T Y O F L A R G E E M P L O Y E R S E X P E C T T OO F F E R A C D H P B Y 2 0 1 8 – B U T M O S T S E E I T A S A NO P T I O N , R A T H E R T H A N A F U L L R E P L A C E M E N T

17%22%

61%

21%

55%

25%25%

61%

15%

Small employers (10-499 employees)

Large employers (500+ employees)

Jumbo employers (20,000+ employees)

Will offer CDHP along withother medical plan option(s)

Will not offer CDHPWill offer CDHP as theonly plan to all or most

employees within the nextthree years

18

E M P L O Y E R S U S I N G V O L U N T A R Y B E N E F I T S T O F I L L G A P SI N C O R E B E N E F I T S

Objectives for program, based on large employers offering VBs

18%

26%

55%

55%

67%

74%

To accommodate employee requests

To help employees reduce financial stress / improve financial health

To give employees opportunity to fill gaps in employer-paid benefits

To offer additional benefits at no cost to employer

To maintain employee benefit options as core benefits change

To help drive participation in lower-cost plans

76% of employerswith voluntary

benefits say theirobjectives have

been met

19

VOLUNTARY BENEFITS

Individual disability 61%

Accident 59%

Cancer / critical illness 45%

Whole / universal life 43%

Legal benefit 30%

Discount purchase program 26%

Long-term care 25%

Hospital indemnity 21%

Auto / Homeowners 20%

Investment advisory 19%

Telemedicine 18%

ID theft 17%

Pet insurance 10%

E X P A N D I N G E M P L O Y E E S ’ V I E W O F T H E W H O L EB E N E F I T P A C K A G E

Meeting diverse needs without driving up employer costsP

erce

ntof

larg

eem

ploy

ers

offe

ring

the

bene

fit

20

I N T E G R A T I N G V O L U N T A R Y A N D C O R E B E N E F I T S O NS A M E P L A T F O R M I M P R O V E S E M P L O Y E E T A K E - U P

Large employers

29%

20%

Have integratedVB/core benefits onsame platform

Have notintegrated

Voluntaryand core

benefits areintegrated on

the sameplatform

58%

Voluntarybenefits are

notintegrated

42%

VB sponsors reportinggrowth in take-up over pasttwo years


C O S T T R A N S P A R E N C Y T O O L S

Percentage of employers that contract with a specialty vendor outside the health plan toprovide transparency tool

12%

15%13%

15%

24%22%

2014 2015 Considering

All large employers


Among large employers who provide transparency tools:

• 13% provide incentives to encourage employees to use them.

• 27% track utilization. Of those, about 1 in 5 report utilization of20% or more, but nearly half report utilization of less than 5%.


S T R O N G I N T E R E S T I N R E F E R E N C E - B A S E D P R I C I N GA M O N G T H E L A R G E S T E M P L O Y E R S

10% 11%13%

18%

12%15% 15%

29%

2013 2014 2015 Considering

All large employers

Employers with 20,000+employeesReference-based pricing addresses the

broad variation in prices for health careservices within a given market.


C A R E D E L I V E R Y : H O W A N D W H E R E A M E M B E RA C C E S S E S C A R E

Value-based care thatseeks to rationalizeprovider incentives

New care settings thatgive consumersconvenient, cost-effective options

Innovative tools thatempower the consumer


T E L E M E D I C I N E I S T H E F A S T E S T G R O W I N GT R E N D I N C A R E D E L I V E R Y

11%

18%

30%35%

18%

34%

44% 44%


All large employers


Among large employers offering telemedicine:

• 26% reported a utilization rate of 5% or higher in 2014.

• 47% agree that the telemedicine program has met their objectives.

• 85% say that the most important reason for offering telemedicine is toprovide employees with a more affordable, convenient source of care.


U S E O F A C C O U N T A B L E C A R E O R G A N I Z A T I O N S ( A C O s )I S R I S I N G , B U T C O S T I M P A C T N O T C L E A R T O M O S T

10% 10%13%

29%25%

33% 34%

43%


All large employers


Among employers currently offering ACOs*:

• 80% offer the ACO through their health plan (as a standard offering)rather than through a direct contract.

• 28% actively encourage members to seek care from the ACO.

• 16% report some cost savings achieved with the ACO; most can’tmeasure.

*Results from supplemental survey of employers with 5,000 or more employees


22% 24% 25% 24%

37%41%

48%

35%


All large employers


G R O W T H I N U S E O F “ C E N T E R S O F E X C E L L E N C E ”A M O N G L A R G E S T E M P L O Y E R S


76%

39%

18% 17%

51%

31%

14%

27%19%

26% 23%

34%

Transplants Cancer Women's health(infertility,

pregnancy)

Neonatal care Bariatric Surgery otherthan transplants

Currently use

Considering

T Y P E S O F C O E s C U R R E N T L Y U S E D O R B E I N GC O N S I D E R E D

Among employers with 5,000+ employees offering COEs*:

• 79% say they are likely to expand COE use in the future



M E D I C A L H O M E S G R O W I N G M O R E S L O W L Y , B U T T H EL A R G E S T E M P L O Y E R S S H O W S T R O N G I N T E R E S T

5%7% 7%

17%

13%

20% 21%

30%


All large employers


Among employers with 5,000+ employees offering patient-centered medical homes*:

• 33% actively encourage members to seek care from amedical home.

• 81% report that the amount of savings achieved from usingmedical homes is not known.



W O R K F O R C E H E A L T H : H O W A N E M P L O Y E RI N F L U E N C E S B E H A V I O R , H E A L T H A N D W E L L - B E I N G

Three pillars ofwell-being:physical,

emotional,financial

Activity trackers,mobile appsbring health

consciousnessinto daily life

Culture of healthand social

connections key tobuilding intrinsic

motivation

Employers startingto measure well-being VOI as well

as ROI.

30

H E A L T H A D V O C A C Y I S I N C R E A S I N G L Y R E C O G N I Z E DA S A C R I T I C A L R E S O U R C E I N A C O M P L E X H E A L T HC A R E S Y S T E M

Percent of large employers offering program

79%68%

40%32%

0%

52%

80%77%71%

36% 39% 42%

56%

83%

2014 2015

Phone/webhealth

coaching

Face-to-facehealth

coaching

Sleepdisorder

treatment

Resiliency/stressmanagement

program

Diseasemanagement

Healthadvocate

Healthassessment

NA

Addressing the continuum of health needs

31MERCER’S NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS

31%

29%

26%

27%

59%

Financial calculators to assist with managing personal/family expenses

Tools or resources for retirement planning

Financial planning tools for budgeting or debt management

R E S O U R C E S T O H E L P E M P L O Y E E S I M P R O V E T H E I RF I N A N C I A L H E A L T H

Large employers

Other financial resources

No financial resources provided

32

I N N O V A T I V E T E C H N O L O G I E S A N D A C T I V I T I E S F O R AM O R E E N G A G I N G M E M B E R E X P E R I E N C E

A C T I V I T I E S

All largeemployers

Employerswith 20,000+employees

Worksite biometricscreening event 56% 71%

Business unit/locationgroup challenges 45% 57%

Onsite exercise or yogaclasses or weight lossprograms (such asWeight Watchers)

43% 76%

Personal challenges 40% 55%

Peer-to-peer support 19% 33%

T E C H N O L O G Y - B A S E DR E S O U R C E S

All largeemployers

Employerswith 20,000+employees

Mobile apps 30% 44%

Wearables / apps tomonitor activity 24% 38%

Devices to transmithealth measures toproviders

4% 11%

Onsite kiosks 7% 12%

Other web-basedresources/tools 40% 63%

33

B U I L D I N G A C U L T U R E O F H E A L T H : S I X P O L I C I E ST H A T P R O M O T E E M P L O Y E E W E L L - B E I N G

Large employers

15%

21%

34%

45%

58%

68%Support healthy-eating choices

Tobacco-free workplace

Work environment explicitly encourages physical activity

Support work-life balance (with flex-time, job share, etc.)

Employees may take work time for physical activity, stress relief

Promote responsible alcohol use

1

2

3

4

5

6

34

E M P L O Y E R S U S E F I N A N C I A L I N C E N T I V E S T O D R I V EP A R T I C I P A T I O N R A T E S I N K E Y P R O G R A M S

Large employers

Large employers usingincentives report higher

participation rates.

48%

20%

52%

26%

12%22%

Large employers offering incentives

Large employers not offering incentives

Health assessmentcompletion rate

Lifestyle managementprogram participation rate*

Validated biometricscreening rate

54%40%

27%

Healthassessment

Validatedbiometricscreening

Lifestylecoaching

Offer incentives (among employers with programs)

Including spouses builds engagement:• 62% of employers make key

elements of program available tospouses (up from 56% in 2014)

• Half of those make spouses eligiblefor incentives

*Average % of identified persons actively engaged in program

35

12%15% 17%

21% 22%24%

37% 38%

46% 44%

2011 2012 2013 2014 2015

All large employers


E M P L O Y E R S M A Y B E C O O L I N G O N T O B A C C O - U S EI N C E N T I V E S I N W A K E O F R E G U L A T O R Y Q U E S T I O N S

Offer lower premium contributions to non-tobacco users

Median reduction in annualpremium: $500

36

C O N S I D E R I N G “ V A L U E O F I N V E S T M E N T ” ( V O I ) A SW E L L A S R O I M E A N S D E V E L O P I N G N E W M E T R I C S

Employers with 20,000 or more employees

44%56%

Over two-fifths have attemptedto measure program impact…

Havemeasured

VOI

17%

25%

25%

26%

44%

66%Positive impact on medical cost trend

Improved productivity

No positive impact was found so far

…with the majority of these reportingimprovement in medical plan trendand/or other areas

Improved attraction and retention

Positive impact on disability cost trend

Improved employee satisfaction

37

B R I N G I N G I T A L L T O G E T H E R : P R I VAT EB E N E F I T E X C H A N G E E M P O W E R S C O N S U M E R ,A D D I N G VA L U E B Y A D D I N G C H O I C E

Satisfy a morediverse populationwith more diverse

needs

Promote efficiencyby allowing

employees to buyonly what they need

Add choicewithout addingadministrative

burden

Ease transitionto a more

sustainableprogram

38

P R I V A T E H E A L T H B E N E F I T E X C H A N G E S G A I N AF O O T H O L D A S I N T E R E S T C O N T I N U E S T O B U I L D

Large employers

4% 4%

13%

6%8%

15%

27%24%

17%

For active employees For pre-Medicare-eligibleretirees*

For Medicare-eligible retirees*

Use nowUse now / planned for 2017Considering using within 5 years

* Among current retiree medical plan sponsors

39

F R O M H I R E T O R E T I R E : M E R C E R M A R K E T P L A C E I SM O R E T H A N J U S T A P R I V A T E E X C H A N G E

GROUP ACTIVE RETIREE PART TIMERS, PRE-65 RETIREES, COBRA

EDUCATION

& CHANGEMANAGEMENT

DECISION

-MAKINGTOOLS

BROADERSELECTION OF

PLANS

ALTERNATIVEHEALTHCARE

OPTIONS

365-DAYWELLNESSPROGRAMS

VOLUNTARYBENEFITS

LICENSEDBENEFITS

COUNSELORS

40

M E R C E R M A R K E T P L A C E F O O T P R I N T : U N S U R P A S S E DG R O W T H

Mercer MarketPlace 2016

41

M E R C E R M A R K E T P L A C E : S A V E U P T O 1 5 %


42

M E R C E R M A R K E T P L A C E : A V E R A G E S A V I N G S R E S U L T S

9%

Cost Levers

1.6% 56%

Average Year 1

Employer

Savings

Average

Year 2 & 3

Cost Increase

EmployeesEnrolled in

High Deductible

Plans v 25%

National AverageMore InformedEmployees

Purchasing Power

Breadth of Carrier &Network Offerings

Defined Contribution

Wellness & ImprovedCare Management

Buying Coalitions

$975

Average Year 1

Per EnrolledEmployeeSavings


9% 1.6%$975

43

5 6 % O F E M P L O Y E E S A R E E L E C T I N G H I G H D E D U C T I B L EP L A N S

3%

15%

25%

26%

26%

4%

$0 deductible plan

$350 deductible plan

$800 deductible plan

$1,500 or $1,850 deductible plan




44

A B O U T 1 / 3 O F E M P L O Y E R S A R E U S I N G A D E F I N E DC O N T R I B U T I O N S T R A T E G Y

Employer subsidy strategies in place as of January 2016

70%

30%

Defined Benefit Defined Contribution

Defined contribution amountsprovided by employers often varywithin their population.

Most common differences are:

• Family tier

• Employee salary

• Employee category


45

S U P P L E M E N T A L H E A L T H C O V E R A G E S U P P O R T SC O N S U M E R P U R C H A S E O F H I G H E R - D E D U C T I B L E P L A N S

Summary of January 2016 elections. Percentages represent the prevalence of election within the supplemental health policies.

44%

26%

30%

Supplemental Health Purchases

Accident Hospital Indemnity Critical Illness

36% of employees enrolled in an $800or greater deductible medical plan alsopurchase at least one supplementalhealth policy.


46

G I V E N H O W S T R O N G L Y E M P L O Y E E S V A L U E H E A L T HB E N E F I T S , E V E N S M A L L E M P L O Y E R S P L A N T O S T A YI N T H E G A M E

Percent of employers that say they are “very likely” or “likely” to terminate plans withinthe next five years

21%

6%

15%

4%7%

5%

201320142015

Employers with 50-499employees

Employers with 500 or moreemployees

47

Thank You!!

George Lanegeo rge. l ane@mercer .com

20 2-3 31-5222

Documents

MERCER’S NATIONAL SURVEY OF EMPLOYER … FILES/2016 Programs/Mercer Survey...Mercer’s National Survey of Employer-Sponsored Health Plans 2015 2 THE YEAR’S TOP STORIES Mercer’s