Health Care Plans Trend Towards More Affordable Options for Employers, and More Cost Sharing by Employees
PORTLAND, Ore., Jan. 08, 2019
PORTLAND, Ore., Jan. 08, 2019 /PRNewswire-PRWeb/ -- According to the Hagan Hamilton Insurance, a United Benefit Advisors (UBA) partner firm, the 2018 UBA Health Plan Survey, released September 16, 2018, shows that premium renewal rates for employer sponsored health insurance increased an average of 9.8% in 2018, the highest increase in the last decade. Initial analysis shows that the majority of these increases were seen by employees, especially those enrolled in PPO plans. The average cost increased 6% for employees, while employers only increased their contributions 3.1%. A significant variance between regions makes it valuable for employers to consider each region's unique trends.
While national prices trended up, states in the West saw a decrease in premium costs of 4% on average. In fact, it is the only region to see any sort of decrease in 2018. The popularity of HMO plans in states like California, where HMO plans now account for 50.8% of plan enrollment, is a major factor in that decrease. HMOs are on the rise across the country, after several years of decreased popularity, likely because they are an inexpensive option for employers.
In addition to affecting the rise in HMOs, the consistent increase in premiums has begun a movement towards plans which split costs between the employer and employee. The survey reported that while PPO plans still have the highest enrollment in all regions, enrollment in CDHP plans increased 8.3% from 2017 to 2018. The only region that didn't see this increase was the Northeast, where CDHP plans are already dominant. In Oregon in particular, employers have turned to options including CDHPs as well as providing their employees with HRA or HSAs to share healthcare costs where they can.
"Unlike in previous years, HMO and CDHP plans did not provide as much refuge for small employers, who experienced an average 4.2% increase in costs," says Peter Weber, President of UBA. "While employers with more than 1000 employees were hit the hardest in 2018 with a 9.6% increase, it is important to note that these increases are changing how both large and small employers are approaching healthcare. Despite continued extensions on the ability to grandmother,' the practice saw a drastic decrease from 2017, and the reduction of prescription drug coverage will likely continue to cover the cost of rising premiums."
Beyond plan choices and premiums, the UBA Health Plan Survey revealed useful information about many other aspects of benefits plans that employers may want to take note of.
Prescription Drug Plans— Prescription drug plans continue to show an increase in complicated benefit structures to accommodate the ever-rising cost of medications. Survey data show that most plans include three-, four-, or five- tier structures and continue to grow in complexity. While generic prescriptions continue to hover with copays of $10 on average, out-of-pocket costs for brand name and specialty medications have increased significantly, especially in plans with three or more tiers.
"Due to the complexity of the data, UBA is planning on releasing a separate report in which we hope to give foresight on the future of prescription benefit trends and the out-of-pocket costs associated with those plans," says Weber.
In the West region, trends show an increased number of four-tier prescription plans, which now make up just over 60% of the market. With copays averaging at about $23 on four-tier plans, employees are seeing a rise in the price they're paying for medications. Further developing these data should give more clarity on how this trend will continue in the future.
Out-of-Pocket Costs—While in-network median deductibles for single coverage remained steady across all plans for 2018 at $2,000, in-network PPO median deductibles saw an increase from $1,500 in 2017 to $2,000 in 2018. In addition, out-of-network deductibles saw a 12.5% increase, rising from $4,000 to $4,500 in all regions.
The West region has seen a larger increase than other regions in single coverage deductibles, with an average of $2,271. This is likely due to the larger trend of moving towards plans which allow employers to split the cost with employees. Single family deductibles saw an increase as well, but it was slightly less than the nationwide average at $3,980.
Self-Funding—The survey found a dramatic increase in employers using self-funding arrangements, with 20% of plans including a self-funding arrangement compared with 12.8% of plans in 2017.
More significantly, data show accelerated adoption of self-funding in small group markets. The survey reports a 122% increase in the 25 to 49 life groups and a 28.5% increase in the 50 to 99 life market. Self-funding only accounts for 8.2% of plans in the West but may be on the rise as these plans become more desirable to small businesses.
"While small groups have shown a significant increase in self-funding arrangements, we have seen a decrease in self-funding health plans for the 1000+ employer size category," says Weber, "The large group market has seen a nearly 6% decrease in self-funding plans despite the attractive options it offers and its popularity with large groups in the past."
More information on upcoming trends and 2018 statistics are available in the 2018 UBA Health Plan Survey Executive Summary is available. For interviews, or to request a copy of the 2018 UBA Health Plan Survey Executive Summary, contact Jason John, COO | Partner, jason(at)haganhamilton.com or 503-565-3341.
Contact us at jason(at)haganhamilton.com or 503-565-3341 for a customized benchmark survey based on industry, region and business size.
About Hagan Hamilton Insurance Solutions
We're an independent insurance agency offering a comprehensive suite of insurance solutions to protect you from the unexpected. We don't just sell insurance. We work closely with clients to help them make important and informed decisions every day when it comes to protection and their future. We offer comprehensive insurance solutions throughout Oregon and Southwest Washington, including Yamhill County, Columbia County, Lane County, Linn-Benton County, Polk County, Washington County and Clatsop County. For more information, visit http://www.haganhamilton.com.
About the 2018 UBA Health Plan Survey
The 2018 UBA Health Plan Survey contains the validated responses of 14,131 health plans and 8,072 employers, who cumulatively employ over two and a half million employees and insure more than five million total lives. While other surveys primarily target large employers, the focus of the UBA survey is to report results that are applicable to the small and mid-size companies that represent the overwhelming majority of the nation's employers, while also including a mix of large companies in rough proportion to their actual prevalence, nationally. This is an important distinction compared to other national surveys.
About United Benefit Advisors
United Benefit Advisors® (UBA) is the nation's leading independent employee benefits advisory organization with more than 200 offices throughout the United States, Canada, England and Ireland. UBA empowers more than 2,000 Partners to both maintain their individuality and pool their expertise, insight, and market presence to provide best-in-class services and solutions. Employers, advisors and industry-related organizations interested in obtaining powerful results from the shared wisdom of our Partners should visit http://www.UBAbenefits.com.
SOURCE Hagan Hamilton