One in five employers will offer only CDHP in 2014: Survey

Editor Note: This article originally appeared here.

More large employers are reducing the type of health care plans they offer as they try to keep better control of their costs, according to a survey released Wednesday [August 28, 2013].

Next year, 22% of employers responding to a National Business Group on Health survey say consumer-driven health plans will be the only plan design they offer to employees.

That compares with 19% this year and is triple the percentage of employers that offered only CDHPs in 2009.

The appeal to employers of a CDHP-only approach is obvious: Because of their high deductibles, the plans are much less expensive than more traditional plans, such as preferred provider organizations. A Kaiser Family Foundation released last week found that the average cost of family coverage through CDHPs was nearly $1,500 less per employee than PPO coverage.

“Employers will do everything they can to reduce medical trend,” NBGH President and CEO Helen Darling said during a briefing on the Washington-based group’s survey.

Health reform law driving changes

Provisions in the 2010 health care reform law are a big factor driving employers to keep better control of their costs, Ms. Darling said.

For example, a 35% excise tax will be imposed on health care plan costs that exceed $10,200 for individual coverage and $27,500 for family coverage effective in 2018 under the law.

Employers said they have to start to take action now to control costs so their plans won’t hit the ceilings that will trigger the tax, Ms. Darling said.

Employers are considering other actions to better control health care costs, according to the survey.

Instead of directly offering coverage, 40% of employers said they are considering, in 2015 or later, moving retirees to private exchanges, where retirees would purchase coverage from participating insurers.

Under that approach, employers specify how much they will pay toward a premium, limiting their liability to a fixed amount. Just 10% of respondents now utilize such an approach.

While employers face new costs under the Patient Protection and Affordable Care Act, the law also could open the door for employers to save costs in other ways.

For example, under proposed Internal Revenue Service regulations, lower- and middle-income employees and dependents eligible for COBRA coverage could opt instead for policies written by insurers and offered in public exchanges, with the federal government subsidizing the premiums.

That would save COBRA beneficiaries money since they now pay the full COBRA premium. Employers would save as well, since those opting for COBRA tend to use more health care services than active employees.

In fact, 41% respondents in the NBGH survey said COBRA beneficiaries will choose exchange coverage rather these opt for COBRA.

The survey is based on the responses of 108 employers.

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