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MENLO PARK, Calif. — Employee wellness programs have become a popular strategy for employers trying to control costs, according to the Kaiser Family Foundation/Health Research and Educational Trust 2013 Employer Health Benefits Survey released Tuesday. In 2013, 35% of employers reported they have a very effective strategy for controlling costs, a larger share than says the same about any other strategy, including disease management (22%), consumer-driven health plans (20%) or higher cost sharing (17%).
Nearly all large employers (at least 200 workers) offer at least one wellness program, which can take many forms and target a wide range of conditions. More than a third (36%) of large employers who offer wellness programs offer some kind of financial incentive for workers to participate, such as lower premiums or a lower deductible, receiving a larger contribution to a tax-preferred savings account, or gift cards, cash or other direct financial incentives.
Among large firms offering health benefits, more than half (55%) offer some kind of biometric screenings to measure workers’ health risks. Of these, 11% reward or penalize workers financially based on whether they achieve specific biometric outcomes. Under the Patient Protection and Affordable Care Act, employers will have broader use of financial incentives to encourage workers to improve their health status and outcomes.
“This will be an important issue to watch next year, as employers will have more flexibility and could ask workers to pay more because of their lifestyles and health conditions,” stated Kaiser VP Gary Claxton, the study’s lead investigator and director of the Foundation’s Health Care Marketplace Project.
For the first time, the survey also asked large employers about their interest in private health insurance exchanges, a relatively new concept that pulls together a wide range of insurance plans which participating employers can offer to their workers to choose from. Though relatively few chose this option in 2013, 29% of those with at least 5,000 workers say they are considering offering benefits through a private exchange in the future. These large firms employ almost 40% of all covered workers, so their interest could portend a significant shift in the way many people get their health insurance in the future.
While employers continue to seek ways to reduce healthcare costs, the rise in healthcare premiums has actually been moderating this year before some of the final parts of the ACA go into effect.
Annual premiums for employer-sponsored family health coverage reached $16,351 this year, up 4% from last year, with workers on average paying $4,565 toward the cost of their coverage, according to the survey. During the same period, workers’ wages and general inflation were up 1.8% and 1.1% respectively.
This year’s rise in premiums remains moderate by historical standards. Since 2003, premiums have increased 80%, nearly three times as fast as wages (31%) and inflation (27%). The slow growth in premiums means that fewer employer plans are likely to be subject to the ACA’s high-cost plan tax that takes effect in 2018. The Congressional Budget Office recently reduced its estimate of the number of plans that would trigger the tax, and a continued low growth rate could further reduce the impact of this provision.
“We are in a prolonged period of moderation in premiums, which should create some breathing room for the private sector to try to reduce costs without cutting back benefits for workers,” stated Drew Altman, Kaiser president and CEO.
The survey found that firms with many lower-wage workers (at least 35% earning $23,000 or less annually) require workers to pay $1,363 more on average toward family premiums than workers at firms with fewer lower-wage workers ($5,818 vs. $4,455 annually). The lower-wage firms on average offered less costly coverage too, creating a large disparity in the share of the premium that their workers pay (39% vs. 29%).
This year, 78% of all covered workers faced a general annual deductible, up from 72% in 2012. Workers typically must pay this deductible before most services are covered by their health plan. The average deductible this year for worker-only coverage was $1,135, similar to the $1,097 average deductible in 2012.
The survey also found that large deductibles of at least $1,000 or more are common in employer-sponsored plans, especially among workers of smaller firms. This year, 38% of all covered workers faced such a deductible. At small firms, 58% of covered workers now face deductibles of at least $1,000, including nearly a third (31%) who face deductibles of at least $2,000, up from 12% in 2008.
The 15th annual Kaiser/HRET survey is a joint project of the Kaiser Family Foundation and the Health Research & Educational Trust. The survey was conducted between January and May of 2013 and included 2,948 randomly selected, non-federal public and private firms with three or more employees (2,067 of which responded to the full survey and 881 of which responded to a single question about offering coverage).
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