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Employers Expect Lower Premium Hikes Than on Health Law Exchanges

By Erin Mershon, CQ Roll Call

August 9, 2016—Large employers are expecting employee health benefit costs to rise by 5 percent in 2017, less than half the increase expected for consumers who purchase health care on the public exchanges created by the 2010 health law.

The figure comes from an annual survey of companies with an average of 20,000 employees conducted by the National Business Group on Health. The group this year emphasized the differences between coverage on the exchanges and in the employer market, where premium and deductible increases are projected to be lower.

Affordability remains a challenge across most insurance markets, especially those established by the health law. Plans on public exchanges are requesting premium increases of an average of 23 percent, according to an analysis this week from the ACA Signups blog, though regulators may not approve those requests in full.

"When we look at where employer-sponsored health care is today versus the public exchanges, it's still the most effective and efficient way for employers to provide affordable health care to their employees," said Brian Marcotte, the president and CEO of the National Business Group on Health.

Employees for large companies can expect "pretty much business as usual" during the upcoming enrollment season, Marcotte said. Premium increases will be about on par with prior years, and most employers aren't anticipating major plan design changes.

Employers continued to push back on the so-called Cadillac tax on high cost health plans in their survey responses. Most said their most popular health plans would trigger the tax by 2020, if it is implemented. Congress last year passed a two-year delay of the tax, and there is bipartisan support, including from both major presidential candidates, to repeal the tax entirely.

Though there are few major innovations in plan design, the survey found, employers are increasingly experimenting with new delivery system models like accountable care organizations and so-called centers of excellence as alternate ways to improve affordability.

"Once you have a high deductible plan, where do you go from there?" Marcotte asked. "You really need to turn your sights on the delivery system if you want to control high health care costs."

Telemedicine is far and away the most popular new model in the employer market. Five years ago, about 7 percent of employers offered telemedicine choices to their employees. By 2017, about 90 percent will do so, the survey said.

The survey also found that specialty pharmacy was the biggest driver of cost increases, even though those costs applied only to 2 or 3 percent of employees on a given plan. Three years ago, Marcotte said, specialty pharmacy cost was not even in the top five contributors to cost increases.

The survey was conducted among 133 large employers, 75 percent of which have at least 10,000 employees. Thirty percent of respondents have over 50,000 employees. Together, the survey's respondents cover 15 million employees and their dependents, about 10 percent of the employer market nationwide and more than the number of people covered through the health law exchanges.

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