Employers not ditching employee health plans for private exchanges

U.S. employers plan to continue offering health insurance plans to their employees, even in the face of rising healthcare costs and the availability of the federal and state insurance exchanges.

Eighty-three percent of employers consider offering health benefits to their employees important to keeping and attracting employees according to a survey from global professionals services company Towers Watson. Those employers said they will continue to subsidize and manage health benefits for both full-time and part-time employees. However, they are considering capping healthcare coverage subsidies for active employees and reducing how much they chip in to cover spouses and dependents.

Towers Watson surveyed 379 employee benefit professionals from midsize to large companies across a variety of industries collectively employing 8.7 million employees. The survey, conducted in July, reflects healthcare benefit decisions employers are making for 2014 to 2017.

Some key findings of the survey:

• After making plan design changes, employers expect a 4 percent increase in 2015 healthcare costs for active employees. Employers estimate an increase of 5.2 percent if no plan adjustments are made.
• 73 percent said they are somewhat or very concerned their plans and cost trajectory will mean they will have to pay the Affordable Care Act's excise tax. 43 percent said that avoiding that tax is a top priority for their healthcare strategies in 2015.
• 81 percent plan moderate to significant changes to their health plans over the next three years. Potential cost-cutting measures include encouraging the use of telemedicine; tying incentives to specified health outcomes; offering plans with higher benefits based on the use of high-performance providers or narrow networks.
• 24 percent said private health exchanges could be a viable alternative for their full-time employees in 2016. The top three factors that would cause employers to consider moving to an exchange are: the evidence that the exchange could provide greater value than their current model; other large companies in their industry move to a private exchange; and the inability to avoid the ACA's excise tax.