Steering employees toward highest-quality affordable care

As health care costs continue to rise at a faster pace than wages or inflation, employers face the challenge of changing plan design to control company costs while keeping health care premiums and out-of-pocket costs affordable for employees.

More employers continue to make stepwise changes in implementing value-based designs. By applying design features or incentives, employers are striving to nudge their employees toward higher value and efficient care, and away from potentially wasteful services.

• Today while 17% of employers reduce out-of-pocket costs for the use of high-value services supported by evidence, they expect this figure to nearly triple (growing to 46%) by 2021 (Figure 1). At the same time, only 7% currently increase out-of-pocket costs for use of low-value services that are commonly overused, but in the next two years 34% plan to adopt such penalties.
• Employers are also actively reviewing out-of-network coverage and costs. The number of companies reducing out-of-network reimbursements or eliminating non-emergency out-of-network coverage could more than double by 2021.

Figure 1. Employers are considering a variety of value-based designs

Which specific value-based designs or activities does your organization have in place or plan to have in the next few years?

Sample: Companies with at least 100 employees
Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey

Best Practices: value-based design

• Lower out-of-pocket costs for proven high-value services and raise out-of-pocket costs for low-value or wasteful services.
• Proactively address workplace opioid abuse by offering medication-assisted treatment to employees with opioid use disorder.
• Reduce out-of-network reimbursements.

Account-based health plans

Adoption of ABHPs matures

Following the steady rise in the use of ABHPs in the past decade, sponsorship rates appear to be peaking. Over four-fifths of employers (84%) currently offer an ABHP, up from 54% in 2010 (Figure 2)¹ with only a few more companies planning to add ABHPs for the first time in 2020 (1%), which suggests we have reached a mature state of ABHP adoption after about 20 years since their inception. However, many companies are still migrating employees into these programs.

One-fifth of companies are expected to only offer employees ABHPs by 2020, compared with 3% a decade ago.

Figure 2. Has ABHP sponsorship peaked?

Percentage offering or planning to offer ABHP

Note: Based on companies with at least 1,000 employees with or without an ABHP. Years 2007 – 2014 are based on prior years of the Towers Watson survey.
*Includes companies indicating “Planned for 2020.”
Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey

Rethinking total replacement

At the same time, employers are stepping back from total replacement. Currently, 19% of employers offer their employees only ABHPs, a figure that is expected to increase a modest two percentage points in 2020.² In fact, the percentage of employers exclusively offering ABHPs has hovered in the 20% range since 2015. Employers are proceeding cautiously and rethinking their ABHP strategies. Over a third of employers (37%) that had intended to move to full replacement have decided to continue offering plans with low point-of-care costs (Figure 3). Among employers that were offering only ABHPs in 2019, a quarter plan to reintroduce plans with low point-of-care costs in 2020 to 2021.³

Overall this reassessment of total replacement suggests employers are attempting to address affordability issues for workers who may be struggling to afford high deductibles. In doing so, they are putting employee needs and preferences at the center of their health care strategy. Employers are also recognizing that a tight labor market imposes limits on cost shifting.

Figure 3a. Over one-quarter of employers that intended to move to full replacement have decided to maintain plans with low-point-of-care costs

Figure 3b. A quarter of employers that had full replacement in place in 2019 intend to reintroduce plans with low point-of-care costs in 2020-2021

HSAs continue to grow

Ninety-five percent of employers offered an HSA with their ABHP in 2019 (including 21% that offered both an HSA and HRA), an increase of 2% over the prior year (Figure 4).⁴ By comparison, 26% of employers with ABHPs offered HRAs in 2019, down from 29% in 2018.⁵ HRA use may change in the future with the new individual coverage HRA (ICHRA) that employers will be able to offer starting in 2020.

Figure 4. HSA offerings continue to expand, and most companies offering HRAs today plan to continue

Does your organization have an ABHP with an HRA or a ABHP with an HSA?

Note: Years 2007 – 2014 are based on prior years of the Towers Watson survey.
Sample: Companies with at least 1,000 employees
Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey

Employers cite two key reasons for offering an ABHP with an HRA: to cover specific pharmacy benefits (40%) and to better support their low-income population (38%). In addition, slightly over a third of employers (36%) indicate that they offer an ABHP with an HRA because this allows for lower deductibles.

HSAs help employees save for health care expenses on a pretax basis. Employers provide HSA contributions to help defray point-of-care costs. Over four-fifths of employers (83%) provide these contributions by seeding money into the accounts. To help employees understand how HSAs work and to encourage them to contribute to an HSA, employers are providing year-round education on HSAs through seminars and counseling (49%), and they are educating employees on how HSA funds can serve as a source of emergency savings (49%) (Figure 5).

Figure 5. Education is the primary way to encourage employee contributions

What steps has your organization taken to encourage more employee contributions to the HSA?

Sample: Based on companies with at least 100 employees that offer total replacement ABHPs Source: 2019 Willis Towers Watson Best Practices in Health Care Employer Survey

Best Practices: ABHPs

• Offer an HSA and provide ongoing education on the value of HSAs.
• Carefully evaluate HSA vendors.

Figure 6a. Best performer advantage

Offer an ABHP as the default plan

Figure 6b. Best performer advantage

Contribute funds to an HSA

Participation

Employees continue to focus on wellbeing participation requirements. Roughly a third of employers (34%) will require employees to participate in other health and wellbeing activities in order to receive reduced employee cost sharing, but by 2021 the prevalence of this practice is expected to jump to 52% (Table 1).

To avert across-the-board increases, companies continue to pass the higher cost of family coverage on to employees. This is especially the case when spouses have coverage from their own jobs. Roughly a quarter of employers (27%) charge more to cover spouses when other employer coverage is available, with 43% planning to do so in two years.⁶

Which specific actions/programs does your organization have in place or plan to have in place for health care contributions, premiums and benefit designs?

*Planning for 2020 ^Considering in 2021
Sample: Companies with at least 1,000 employees
Source: 2016, 2017, 2018 and 2019 Willis Towers Watson Best Practices in Health Care Employer Survey

Best Practices: participation

• Use spousal surcharges when other employee coverage is available.
• Set contribution levels for employees with families higher than for single members.

Footnotes

1 ,2, 3, 4, 5, 6. Ibid., 1.