More Cost-Shifting Coming From Companies

The steady erosion of health care benefits comes as no surprise to employers and industry experts who have watched health care costs spiral upward for years, but the news may still be sinking in for workers as they take on a greater share of those costs.

“Employees have been hearing that health care costs are unsustainable for many years, but it’s a message that gets tuned out if it doesn’t impact them directly,” said Joann Hall Swenson, a communications consultant at Aon Hewitt. “When it starts to impact them personally, then they start to pay attention and they expect their employer to have an answer.”

As companies continue to push high-deductible health plans, which offer lower premiums but higher deductibles than traditional plans, employees are finally feeling the pinch in their pocketbooks.

“It’s one thing to hear about unsustainable health care costs, which sounds like rhetoric, but when people try to manage their HDHPs, that’s where rubber meets the road,” Swenson said.

And as the cost-shifting trend continues, employees will be faced with some tough realities as their health care spending skyrockets.

The average amount that workers need to contribute toward their health care costs has increased more than 134 percent in the past decade, according to a recent report by Aon. At the same time, large employers have seen record low increases in their health care costs. In 2015, the average rate increase was 3.2 percent, according the report.

“We’ve seen this trend for a very long time, and we will continue to see benefits decrease especially with the excise tax looming in 2018,” said Mike Morrow, a senior vice president at Aon Hewitt, referring to the so-called “Cadillac” tax. “We will increasingly see those benefit levels decline at the same time; we don’t expect inflation or wages to kick up.”

One reason for this slowdown in rate increases is that some employees are forgoing medical treatment because of a sluggish economy, Morrow said.

And that is a problem not only for employees who can’t afford to get the treatment they need, but also for employers who could see their cost-containment strategies backfire down the road, said Cheryl Fish-Parcham, private insurance program director for Families USA, a nonprofit consumer health organization based in Washington, D.C.

“Studies have shown that many working families don’t have enough savings to meet their health care needs until their health plan starts kicking in,” Fish-Parcham said. “We’ve seen a number of surveys that as many as 50 percent of low to midrange income don’t have the assets they need to meet a deductible. We’re really concerned about how the workforce is faring, and employers should be too because healthy employees means a productive workforce.”

She pointed to a recent survey by the Commonwealth Fund, a private, nonpartisan research foundation based in Washington, D.C., that shows that 25 percent of privately insured adults had premiums, deductibles or out-of-pocket costs that are unaffordable. Workers struggled most with paying their deductibles, with 43 percent of those surveyed saying that their deductible was “difficult” or “impossible” to afford, including a large share of workers with higher incomes, according to the survey.

That has led to a growing number of employees who are avoiding or delaying needed medical care. About 40 percent of workers with deductibles higher than 5 percent of their income reported that they had not gone to the doctor when sick, skipped a preventive-care test or a follow-up test, or didn’t go to a specialist, according to the Commonwealth Fund report.

Adding to the problem is confusion about which services count toward deductibles and which are provided at no cost. Many employees are avoiding free preventive care because of their deductible, the report said.

But there are several things that employers can do to help workers navigate the changing and often confusing health care system, like explaining the reasons for any changes, Swenson said.

“It’s a very complex topic, and it’s not just about cutting health care costs,” she said. “When people get the broader business reasons for why their deductibles are going up or why costs are going up and understand that the employer is trying to do right by the employee, it’s easier to digest.”

How much you tell employees depends on the company’s culture, according to Swenson.

“We have clients who are very forthright and frame it within the business context, and others are careful to steer away from that discussion,” she said. “If you have a culture where employees are used to leadership giving them straight talk, then use that cultural framework to talk about health care costs. If the message is not in line with how you usually talk, then it won’t sound authentic to employees.”