A majority of large U.S. employers are moving forward with plans to make changes to their 2011 health care benefit programs in the wake of both health reform and expected large health benefit cost increases next year, according to a new survey by the National Business Group on Health, a non-profit association of large employers.

The survey found that more than half (53 percent) of respondents are still planning to make changes to their benefit plans despite the uncertainty that exists around complying with the Patient Protection and Affordable Care Act. Another two of ten employers (19 percent) are scaling back changes they planned to make while an equal number are making no changes. The remaining respondents were still undecided pending further review of the final regulations.

Among the employers who will be making specific changes to their health benefit plans to comply with the new law, 70 percent said they will remove lifetime dollar limits on overall benefits while 37 percent reported they will make changes to annual or lifetime limits on specific benefits. About one in four (26 percent) will remove annual dollar limits on overall benefits while 13 percent will remove pre-existing condition exclusions for children. The survey, based on responses from 72 of the nation's largest corporations representing more than 3.7 million employees, was conducted in May and June 2010.

"While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven't lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government," said Helen Darling, president of the National Business Group on Health. "In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year."

According to the survey, employers estimate their health care benefit costs will increase an average of 8.9 percent next year, compared with an average increase of 7 percent this year. To help control those increases, employers are planning to use a wider variety of cost-sharing strategies. The survey found 63 percent of employers plan to increase the percentage employees contribute to the premium, up from 57 percent who did so this year, while 46 percent plan to raise out-of-pocket maximums next year compared with 36 percent this year.

More Employers Shifting to Full-Replacement Consumer-Directed Health Plans
More than six in 10 (61 percent) employers will offer a consumer-directed health plan (CDHP) in 2011. While the most common type of plan employers will offer is a high-deductible plan combined with a health savings account (64 percent), the survey found a big spike in employers moving to a full replacement plan. Among employers offering a CDHP, the number moving to a full replacement plan doubled from 10 percent this year to 20 percent in 2011.

"Consumer directed health plans are living up to their expectations as a way to help save employers money and put employees in greater control of their health care. In fact, offering these plans was the most often-cited tactic by employers to control costs. We fully expect that employer interest in CDHPs, and especially full-replacement plans, will continue to increase in the future," said Darling.

Other findings from the survey include:

  • With the health reform law making Medicare Part D benefits richer as the "doughnut hole" closes between now and 2020, 5 percent of employers plan to drop retiree health coverage in 2011 while 60 percent are considering doing so in the future.
  • Four in 10 (41 percent of employers offered premium discounts for completing health assessments while 22 percent offered premium discounts for participating in tobacco cessation programs.
  • One in four (25 percent) of employers plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefits while 21 percent plan to do the same for mail-order pharmacy benefits.

Copies of the survey report can be found here:
http://www.businessgrouphealth.org/pdfs/Plan percent20Design percent20Survey percent20Report percent20Public.pdf

About the National Business Group on Health
The National Business Group on Health is the nation's only non-profit organization devoted exclusively to representing large employers' perspective on national health policy issues and providing practical solutions to its members' most important health care problems. The Business Group helps drive today's health agenda while promoting ideas for controlling health care costs, improving patient safety and quality of care and sharing best practices in health benefits management with senior benefits, HR professionals, and medical directors from leading corporations. Business Group members, which include 64 Fortune 100 companies, provide health coverage for more than 50 million U.S. workers, retirees and their families. For more information, visit www.businessgrouphealth.org