BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

Group health care plans see modest cost increases: Mercer

Group health care plans see modest cost increases: Mercer

Aided by a surge in enrollment in high-deductible plans, group health care plan costs have continued to increase modestly this year, according to a survey by Mercer L.L.C.

In 2014, group health care costs increased 3.9% to an average of $11,204 per employee compared with $10,779 in 2013, according to the survey — conducted in late summer — of more than 2,500 employers released Wednesday.

While that 3.9% increase is higher than last year's 2.1% increase, it is sharply below the 7% average annual increase over the past 15 years.

“Employers have done a remarkable job of holding down health cost growth for the past few years,” Julio Portalatin, Mercer's New York-based president and CEO, said in a statement.

This year's relatively modest increase in costs is due, at least in part, to the growth in employee enrollment in consumer-driven health care plans, Mercer said. This year, 23% of employees were enrolled in CDHPs, up from 18% in 2013, the biggest one-year increase in CDHP enrollment since Mercer began tracking CDHP enrollment about a decade ago.

The growth is not surprising. With CDHPs, in which a health savings account or health reimbursement arrangement is linked to a high-deductible plan, employers can deeply cut their health care costs. For example, at an average cost of $8,789 per employee in 2014, CDHPs cost 20% less than health maintenance organizations, whose costs averaged $11,052 per employee, and 18% less than preferred provider organizations, with an average cost of $10,664 per employee, Mercer said.

Employers are stepping up other efforts to control costs For example, 56% of large employers — those with at least 500 employees — now give employees financial incentives to participate in their wellness programs, up from 52% in 2013, while 29% of employers with at least 5,000 employees have worksite clinics providing primary care services.

Still, some employers, despite their cost control efforts, will find their costs surging next year when a health care reform law mandate kicks in requiring employers, to avoid a big financial penalty, to offer coverage to full-time employees, which the law defines as those working an average of at least 30 hours per work. In 2015, the mandate applies to employers with at least 100 employees; and in 2016, the mandate will be extended to employers with at least 50 employees.

“Growth in enrollment is truly the wild card for employer costs next year,” Tracy Watts, Mercer's national leader for health reform in Washington, said in a statement.

“If employers wind up covering many more people, their spending will go up faster than the underlying growth in cost per employee might imply,” she added.

One strategy deployed by employers to hold down enrollment growth is to impose surcharges on dependent coverage for employees whose spouses have other coverage available, such as through the spouses' employers.

Nine percent of employers with at least 500 employers add such surcharges, while in the case of the largest employers — those with at least 20,000 employees, which, Mercer says, can become “dependent magnets” — 27% impose the surcharges.

As in prior years, the survey found that costs and cost increases vary significantly by region. For example, costs in 2014 increased an average of 4% for large employers in the Northeast to an average of $12,347 per employee, the highest percentage increase of any region.

On the other hand, costs for large employers in the West saw costs increase by an average of 2.2% — the smallest percentage increase of any region — to an average of $12,351 per employee.

Read Next