EMPLOYEE BENEFIT TRENDS€¦ · Millennials (Age 34) Traditionalists (Age 70–87) Base pay...

0© MERCER 2016

H E A L T H W E A L T H C A R E E R

EMPLOYEE BENEFIT TRENDS

DENISE JEWELL, PRINCIPALPHOENIX, AZ

JUNE 2016

1© MERCER 2016© MERCER 2016

FIRST, LET’S UNPACK TODAY’S MEGA TRENDSTHE HEALTH CARE MARKET TIPPING POINT

ACCELERATING COST PRESSURE… MEGA-TRENDS COMPOUNDING DISRUPTION

…WITH POOR CARE QUALITY

Explosion of technology and data

Growing consumer accountability

Multi-generational behaviors and needs

Dramatic changes to payor/provider roles

Broad regulatory changes

Preventive health

Acute care

Chronic care

Patient compliance 50% 70% 60%

Care delivery 99% 70% 80%

Efficiency 50% 49% 48%

Health cost outpacing inflation

US: Highest per capita health care spend worldwide

Employer trend expected to continue risingBEFORE PLAN

CHANGESAFTER PLAN

CHANGES

INFLATION EARNINGS

Employees not seeing care improvement

50% efficiency not acceptable in any business

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EXTERNAL ENVIRONMENT MARKET CONSOLIDATION — RISK/OPPORTUNITY

VENDORS

% of hospitals that became part of health systems

PROVIDERS CHANGING ROLES

UNPRECEDENTED CONSOLIDATION IN THE HEALTH CARE ECOSYSTEM IS EXPECTED TO CONTINUE/ACCELERATE, MEANING OPPORTUNITIES — AND RISKS — FOR EMPLOYERS

50% 55% 60% 65%

1999

2001

2003

2005

2007

2009

2011

2013

Source: American Hospital Association TrendWatch Chartbook, 2014

Providers taking risk/selling insurance, e.g.:

Retailers expanding into care delivery, e.g.:

Vendors buying providers, e.g.:


Design and accounts(e.g. CDHPs, accounts as

a vehicle to save/deliver incentives)

Transparency tools(e.g. technology as an

enabler to build awareness/ empower consumer)

Customization(e.g. build your own

portfolio/risk management for “whole-person”)

…LEADING TO IMPORTANT EMPLOYER CONSIDERATIONS

New Front Door to HealthNew modes of on-demand care delivery (e.g., mobile,

telephonic, retail, smart care team access)

Personalized and PreventativePerson-specific, holistic model of health and

wellness supported by new technologies

Transparent MarketNew health and wellness

marketplace defined by transparent competition

and individual choice

Source: Oliver Wyman 2014, “The Patient to Consumer Revolution”

EXTERNAL ENVIRONMENTGROWING CONSUMER ACCOUNTABILITY

TODAY’S HEALTH ECOSYSTEM IS ENGAGING THE CONSUMER IN NEW WAYS…


EMPLOYERS MUST CONSIDER MULTIPLE GENERATIONS’ NEEDS AND PRIORITIES WHEN CRAFTING THEIR HEALTH STRATEGY AND EMPLOYEE VALUE PROPOSITION…

EXTERNAL ENVIRONMENTA MULTI-GENERATIONAL WORKFORCE

29% of today’s workforceLive to work – “Office

face time”

Baby Boomers (Age 51–69)

34% of today’s workforceWork to live – “Work should not define life”

Gen X (Age 35–50)

Millennials (Age 34)

35% of today’s workforceWork my way – “Own

careers, meaningful work”

2% of today’s workforceCompany loyalty – “Same

company forever”

Traditionalists (Age 70–87)

• Choose lowest cost plan — maximize take home pay

• Use social tech platforms to find doctors, make appointments, research health conditions

• Benefits: Not a major factor in whether I stay or leave

• Choose plan that fits the needs of my family

• Have disposable income but need to save where possible

• Benefits that meet my family’s needs: Can affect my decision to stay

• Choose plan that can help me maintain my health

• Make more each year, but lots of competing expenses

• Post-retirement medical benefits can play a role in my decision to stay or leave

• Not sure how I’ll pay for healthcare in retirement or which supplement I need

• Want to know how to make the most of what I’ve saved

• Looking to protect/maximize my benefits so I can retire

EMPLOYEES

Sources: Mercer “Inside Employee Minds” 2015, Pew Research Center, 2015

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Source: Mercer “Inside Employee Minds” 2015

EXTERNAL ENVIRONMENTA MULTI-GENERATIONAL WORKFORCE (CONT’D)

Baby Boomers (Age 51–69)

Gen X (Age 35–50)

Millennials (Age 34)

Traditionalists (Age 70–87)

Base pay

Retirement plan

Type of work

Health care benefits

Incentive pay

Paid time off

Flexible schedule

Working for org. I respect

Career opportunities

Training opportunities

Base pay

Retirement plan

Flexible schedule


Incentive pay

Paid time off

Type of work




Base pay


Incentive pay

Retirement plan

Flexible schedule


Paid time off

Type of work



Base pay

Retirement plan

Paid time off


Incentive pay

Type of work

Flexible schedule




1

2

3

4

5

6

7

8

9

10

EMPLOYEES

…AND A DEEPER LOOK AT GENERATIONAL PREFERENCES DEMONSTRATES VARYING TOTAL REWARDS PRIORITIES BY GENERATION

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EMPLOYEES HAVE BROAD FINANCIAL CHALLENGES

1 American Psychology Association, Stress in America: Are Teens Adopting Adults’ Stress Habits? (2014)

2 Bank of America/Merrill Lynch, Workplace Benefits Report (2013)

3 EBRI, The 2014 Retirement Confidence Survey (2014)

4 MetLife, Inc.,10th Annual Study of Employee Benefits Trends: Seeing Opportunity in Shifting Tides (2012)

5 FINRA, Financial Capability in the United States -Report of Findings from the 2012 National Financial Capability Study (2012)

6 National Institute for Retirement Security, The Retirement Savings Crisis: Is It Worse Than We Think? (2013)

7 out of 10 American workers say financial stress is their most common cause of stress.1

80% of employees report an increase in their health care costs in past two years and 56% are saving less for retirement as a direct result of more health care costs.2

58% of workers and 44% of retirees report having aproblem with their level of debt.3

22% of US employees admit to missing at least one day of work in the past year to deal with a financial problem.4

59% of credit card holders engage in at least one behavior that results in interest or fees; 35% engage in two or more such behaviors.5

$40,000 is the median retirement plan account balance for working-age families; $100,000 for near-retirement age.6


Smok

ing

Advocacy

EXPLOSION OF TECHNOLOGY AND DATA

Employer-Sponsored/Exchange

Communications

Incentives/Challenges

Navigation

M E M B E R

Assessments/Testing

Broad

Big Data Analytics

Centers of

Excellence

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VALUE-BASED CARE IS ALREADY HERE… AND GROWING

A N D W H AT ’ S T O C O M E …W H AT ’ S A L R E A D Y H E R E …

• The number of ACOs in the US more than doubled from 258 in February 2013 to 522 in January 20141

• 67% of the US population lives in an area served by 1 ACO and 40% lives in areas served by 2 or more ACOs1

• Medicare payments attached to alternative reimbursement models are expected to increase from 20% to 50% by the end of 20182

• Health care spend attached to value- based reimbursement models are estimated to increase from less than 20% in 2015 to 46% by 20203

• By 2020, 80%+ of hospital systems will have a fee-for-value component in their P&L3

55-62millionAmericans currently receive health care through ACOs

5.3Min Medicare ACOs

40Mnon-Medicare patients of Medicare ACOs

10-17Mpatients of non-Medicare ACOs

Patients Served by ACOs1

1 As of January 2014. Sources: News releases, company websites, Dartmouth Atlas PCSAs Claritas, Commonwealth Fund; Oliver Wyman analysis

2 http://www.hhs.gov/news/press/2015pres/01/20150126a.html

3 Proprietary Oliver Wyman analysis 2014

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FEE-FOR-SERVICEPROVIDER-CENTRIC

• Payments made to providers for individual services rendered.

• The more services rendered, the more providers get paid.

• Providers often get paid the most for treating poorly managed, non-compliant, unhealthy patients.

FEE-FOR-VALUEPATIENT-CENTRIC

• Payments made to providers based on goals/results – generally cost, quality, and patient experience; maybe in the form of shared savings or care coordination fees.

• The better the care provided, the more providers get paid.

VALUE-BASED CARETHE SHIFT FROM FEE-FOR-SERVICE TO FEE-FOR-VALUE

Patient Centered Medical Home (PCMH)

• PCPs responsible for monitoring and coordinating patient care across all providers and services

• PCPs reimbursed based on toal population cost and quality results

Accountable Care Organization (ACO)

• Delivers integrated care to the patient by bringing together doctors, hospitals, and other health care providers

• ACO providers reimbursed based on total population cost and quality outcomes

Types of Value- Based Care Systems

Value-Based Care creates provider accountability for total population cost and total population health outcomes.


EXTERNAL ENVIRONMENTHEALTH CARE EXCHANGE LANDSCAPE

3 612

22

40

0

25

50

2014 2015 2016 2017 2018

Enro

llmen

t (M

M)

PRIVATE EXCHANGES PUBLIC EXCHANGES

MULTI-CARRIER, OFFERED BY BENEFIT CONSULTANTS/BROKERS

• Collaborative buying focused on cost reduction• Access to multiple carriers • Focus on self-insured, fully-insured, or both• May offer range of ancillary benefits in addition

to core health

SINGLE-CARRIER, OFFERED BY INSURANCE CARRIERS

• Access primarily to plans offered by the providing carrier

• Primarily focused on fully-insured employers

• Typically offer fewer ancillary benefits

• Offer a viable individual market (guaranteed issue, age rating)

• Subsidies available for <400% Federal Poverty Level

• Spur new product offerings• Create new cost benchmarks

Source: The Kaiser Family Foundation

REGULATORY CHANGES ARE SPURRING NEW DELIVERY OPTIONS FOR EMPLOYERS, AND EXCHANGES ARE BECOMING A MAINSTREAM OPTION

Employers adopting private exchanges within 5 years

— most major surveys estimate ~ one in three.

Projected lives on private health insurance exchanges:

Estimated Actual ProjectedSource: Accenture

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EXTERNAL ENVIRONMENTNEW BENCHMARKS

PUBLIC EXCHANGE OFFERINGS HAVE BECOME AN IMPORTANT NEW BENCHMARK FOR COMPARING PLAN DESIGN AND COST

CONSIDER DOING A DEEP DIVE ANALYSIS ON PUBLIC EXCHANGE OPTIONS BY MARKET

EXAMPLE:

• Houston, TX (rating area 10): Using Houston as reference for public exchange:− In virtually every scenario,

public exchange has lower range of plan cost vs employer-sponsored plans

− Cost increases on average were as low as 2.5%

− Number of plans offered has almost doubled

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ACA UPDATEAREAS OF EMPLOYER CONCERN UNDER ACA

ACA Reporting — Minimum Essential Coverage and Employer-Shared Responsibility• Many employers don’t know how they will

handle ACA reporting:

Excise Tax (Recently extended to 2020)

• Employers that will be subject to the tax if they make no changes to their current plans:

Don’t know(41%)

In house (31%)33%

Source: Mercer’s National Survey of Employer-Sponsored Health Plans, National 500+ Source: Mercer, Survey, Health Care Reform Five Years In, 2015

…AND EMPLOYERS IN PARTICULAR FACE EVEN GREATER COST PRESSURES AND REPORTING REQUIREMENTS IN YEARS AHEAD DUE TO LOOMING ACA MILESTONES

31%

11%

10%7%

41%(Don’tknow)

In house Payroll vendorEnrollment vendor Other

32%

68%

Subject to Tax Will not hit Tax

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MERCER NATIONAL SURVEY OF EMPLOYER-SPONSORED HEALTH PLANS

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A B O U T M E R C E R ’ S N AT I O N A L S U RV E Y O F E M P L O Y E R - S P O N S O R E D H E A LT H P L A N S

Oldest Marking 30 years of measuring health plan trends

Largest 2,486 employers participated in 2015

Statistically valid Based on a probability sample of private and public employers for reliable results

Includes employers of all sizes, all industries, all regions Results project to all US employers with 10 or more employees

Most comprehensiveExtensive questionnaire covers a full range of health benefit issues and strategies

Employer size groups in presentationSmall: 10-499 employees/Large: 500+ employees/Jumbo: 20,000+ employees

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1 Cost growth moderate, at 3.8% in 2015 with 4.3% projected for 2016But while large employers held increase to 2.9%, small employers saw cost rise 5.9%

2 One in four covered employees is now in a CDHP Consumerism tools are helping employees make the best plan choice

3 Analysis: 25 strategies that helped employers achieve lower cost and trend in 2015Successful practices spanned program design, care delivery, workforce health

4 Consumer empowerment is building, supported by new programs and technology Telemedicine, cost transparency tools, and mobile devices are all on the rise

5New clinical models — ACOs and medical homes — lead the evolution to value-based careCenters of Excellence and narrow networks are first steps for some employers

6

Private exchanges will be used by 6% of large employers for 2017 open enrollment, with rapid growth expected to continue through 2020Employers seek to add choice, ease administration, manage cost, and more easily transition to CDHPs

T H E Y E A R ’ S T O P S T O R I E S

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C O S T R O S E A M O D E R AT E 3 . 8 % I N 2 0 1 5 , W I T H A S I M I L A R I N C R E A S E O F 4 . 3 % P R E D I C T E D F O R 2 0 1 6

Change in total health benefit cost per employee compared to CPI, workers’ earnings

8.0%

-1.1%

2.1%2.5%

0.2%

6.1%

7.3%8.1%

11.2%

14.7%

10.1%

7.5%

6.1% 6.1%6.1%6.3%5.5%

6.9%6.1%

4.1%

2.1%

3.9%3.8%4.3%*

-2.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

16.0%

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Annual change in total health benefitcost per employee Workers' earnings

Overall inflation

* ProjectedSource: Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual Inflation (April to April) 1993-2015; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey (April to April) 1993-2015.

17© MERCER 2016

S H A R P E R I N C R E A S E B U T L O W E R P E R - E M P L O Y E E C O S T F O R S M A L L E M P L O Y E R S

$11,635 $11,012 $11,973 $10,395

All employers Employers with10-499 employees

Employers with 500or more employees

Arizona

+3.8%+5.9%

+2.9%

Average total health benefit cost per employee in 2015

+1.5%

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B E H I N D T H E AV E R A G EC O S T I N C R E A S E S VA R I E D W I D E LY B Y E M P L O Y E R I N 2 0 1 5

31%

30%

22%

17%

Increase of more than 10%

No increase incost/decrease

Increase of 1-5%

Increase of 6-10%

36%

18%15%

31%

23%

47%

16%

14%

EMPLOYERS WITH 500+ EMPLOYEES

EMPLOYERS WITH 10-499 EMPLOYEES

EMPLOYERS WITH 20,000+ EMPLOYEES

B A S E D O N E M P L O Y E R S P R O V I D I N G C O S T F O R 2 0 1 4 A N D 2 0 1 5

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11.5%

9.9% 9.3%

7.6% 7.6%6.3%

5.1% 5.2% 5.5% 5.4%

8.0%

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Cost of specialty drugs grew by 22% in 2015 among employers that could report cost separately (49%).

ONE KEY COST DRIVER IN 2015: A JUMP IN PRESCRIPTION DRUG BENEFIT COST

Cost change for prescription drug benefits in primary medical plan for large employers

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A C A I M PA C TW H E N T H E D U S T S E T T L E D F R O M “ P L AY O R PAY ” , E N R O L L M E N T L E V E L S W E R E L A R G E LY U N C H A N G E D

Large Employers

• Only 37% of large employers had to take action to comply with the ACA requirement to offer coverage to all employees working 30+ hours per week — most were in compliance prior to the ACA requirement

• Of those taking action, only about one in five experienced an increase in enrollment as a result (or 8% of all large employers)

• Of those in compliance prior to ACA, 10% made eligibility requirements tougher:

- 5% eliminated coverage for PTEs

- 4% increased hours required for coverage

Threshold for offering coverage to “substantially all” employees rose to 95% as of January 2016 — employers need to consider implications

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A C A I M PA C TE M P L O Y E R S T O O K S T E P S T O R E D U C E E X C I S E TA X E X P O S U R E

Large Employers

• Consumer-directed health plans: 39% added a plan or took steps to build enrollment in existing plan

• Dropping a high-cost plan: 11%

• Plan design changes to shift cost to employees: 19%

• Eliminating health care FSAs: 3%

The delay in the excise tax may slow the pace of change, but employers will continue to take action to manage long-term cost growth

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COST-SHIFTING HAS ACCELERATED IN THE HEALTH REFORM ERA, CHALLENGING EMPLOYERS TO HELP EMPLOYEES MANAGE GROWING FINANCIAL RISK

Average PPO deductible for individual, in-network coverage

$1,113 $1,192

$1,410 $1,452

$1,663 $1,681 $1,738

$511 $565 $587 $666 $684 $785 $833

2009 2010 2011 2012 2013 2014 2015

Small employersLarge employers

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WHAT’S WORKING TO HOLD DOWN COST?

Respondents’ costs were analyzed based on their use of more than 25 cost-management best practices

Plan Design and Delivery Infrastructure

• Contribution for family coverage in primary plan is 20%+ of premium

• PPO in-network deductible is $500+• Offer CDHP• HSA sponsor makes a contribution to

employees’ accounts• Voluntary benefits integrated with core • Mandatory generics or other Rx

strategies• Steer members to specialty

pharmacy for specialty drugs• Reference-based pricing• Data warehousing• Collective purchasing of medical or Rx

benefits• Transparency tool provided by specialty

vendor and/or used by 10% of members• Use private health benefits exchange

Employee Well-being

• Offer optional (paid) well-being programs through plan or vendor

• Provide opportunity to participate in personal/group health challenges

• Offer technology-based well-being resources (apps, devices, web-based)

• Worksite biometric screening• Encourage physical activity at work

(gym, walking trails, standing desks, etc.)

• Use incentives for well-being programs

• Spouses and/or children may participate in programs

• Smoker surcharge• Offer EAP

Care Delivery

• High-performance networks • Surgical centers of excellence• On-site clinic• Telemedicine• Value-based design• Medical homes• Accountable care organizations

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COMPARISON OF EMPLOYERS USING THE MOST VERSUS THE FEWEST BEST PRACTICES AGAIN FINDS DIFFERENCES IN COST AND COST GROWTH

Large Employers

Annual total health benefit cost per employee in 2015

$11,346$11,892

Employers using more than 16 best practices

Employers using fewer than 7 best practices

Change in cost from 2014 to 2015

2.9%3.8%

Analysis based on unweighted cost data from respondents providing cost for both 2014 and 2015.

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PROGRAM DESIGNWHO IS OFFERED WHAT BENEFITS, AND HOW THEY PAY FOR THEM

Plan design offerings and

values

Enrollment/ shopping experience

Core versus voluntary —finding the

balance

Eligibility criteria

Enrollment/ shopping

experience


OVER A FOURTH OF ALL COVERED EMPLOYEES ARE ENROLLED IN A CONSUMER-DIRECTED HEALTH PLAN

Large Employers

20%23%

32%36%

39%

48%

59%

75%

8% 10%13% 15%

18%

2009 2010 2011 2012 2013 2014 2015 By 2018(projected)

Percent of employers offering CDHPsPercent of covered employees enrolled in CDHPs

23%

28%

By 2018, 75% of large employers expect to offer a CDHP.


EMPLOYERS SAVE WITH HSA-BASED CDHPsAVERAGE COST WAS MORE THAN 20% LOWER THAN FOR EITHER PPOS OR HMOS IN 2015

Medical plan cost per employee (includes employer contributions to HSA accounts) among large employers

$11,609

$9,921

$12,056

$9,215

PPO PPO with deductible of$1,000 or more

HMO HSA-eligible CDHP


21%26% 29%

2013 2014 2015

ENROLLMENT IN CDHPs GROWS SLOWLY OVER TIME, AND EMPLOYER ACCOUNT CONTRIBUTION IS CRITICAL

Large employers offering HSA-based CDHPs

Enrollment growth over time% eligible employees choosing HSA-based CDHP when offered w/other medical plans*

Employer HSA fundingaffects enrollment% eligible employees choosing HSA when offered with other medical plans

37%32%

22%

Employer HSAcontribution of $800+

Employer HSAcontribution less

than $500

Employer does notcontribute to HSA

*Among employers offering the plan for three years


MAJORITY OF LARGE EMPLOYERS EXPECT TO OFFER A CDHP BY 2018 — BUT MOST SEE IT AS AN OPTION, RATHER THAN A FULL REPLACEMENT

17%22%

61%

21%

55%

25%25%

61%

15%

Small employers (10-499 employees)

Large employers (500+ employees)

Jumbo employers (20,000+ employees)

Will offer CDHP along with other medical plan option(s)

Will not offer CDHPWill offer CDHP as the only plan to all or most employees within the

next three years


18%

26%

55%

55%

67%

74%

To accommodate employee requests

To help employees reduce financial stress/improve financial health

EMPLOYERS USING VOLUNTARY BENEFITS TO FILL GAPS IN CORE BENEFITS

Objectives for program, based on large employers offering VBs

To give employees opportunity to fill gaps in employer-paid benefits

To offer additional benefits at no cost to employer

To maintain employee benefit options as core benefits change

To help drive participation in lower-cost plans

76% of employers with voluntary

benefits say their objectives have

been met


VOLUNTARY BENEFITSIndividual disability 61%

Accident 59%

Cancer/critical illness 45%

Whole/universal life 43%

Legal benefit 30%

Discount purchase program 26%

Long-term care 25%

Hospital indemnity 21%

Auto/Homeowners 20%

Investment advisory 19%

Telemedicine 18%

ID theft 17%

Pet insurance 10%

EXPANDING EMPLOYEES’ VIEW OF THE WHOLE BENEFIT PACKAGE

Meeting diverse needs without driving up employer costsPe

rcen

t of l

arge

em

ploy

ers

offe

ring

the

bene

fit

32© MERCER 2016

COST TRANSPARENCY TOOLS

Percentage of employers that contract with a specialty vendor outside the health plan to provide transparency tool

12%15%

13%15%

24%22%

2014 2015 Considering

All large employers

Employers with 20,000+employees

Among large employers who provide transparency tools:• 13% provide incentives to encourage employees to use them• 27% track utilization. Of those, about 1 in 5 report utilization of 20%

or more, but nearly half report utilization of less than 5%

33© MERCER 2016

C A R E D E L I V E R YH O W A N D W H E R E A M E M B E R A C C E S S E S C A R E

Value-based care that seeks to

rationalize provider incentives

New care settings that give consumers

convenient, cost-effective

options

Innovative tools that empower the consumer

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TELEMEDICINE IS THE FASTEST GROWING TREND IN CARE DELIVERY

11%18%

30%35%

18%

34%

44% 44%

2013 2014 2015 Considering

All large employers


Among large employers offering telemedicine:• 26% reported a utilization rate of 5% or higher in 2014• 47% agree that the telemedicine program has met their

objectives• 85% say that the most important reason for offering telemedicine

is to provide employees with a more affordable, convenient source of care

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USE OF ACCOUNTABLE CARE ORGANIZATIONS (ACOs) IS RISING, BUT COST IMPACT NOT CLEAR TO MOST

10% 10%13%

29%25%

33% 34%

43%


All large employers


Among employers with 5,000+ employees offering ACOs*:• 80% offer an ACO as a standard health plan offering• 28% actively encourage members to seek care from the ACO• 16% report some cost savings achieved with the ACO; most

can’t measure

*Results from supplemental survey of employers with 5,000 or more employees

36© MERCER 2016

TELEMEDICINE IS THE FASTEST GROWING TREND IN CARE DELIVERY

11%18%

30%35%

18%

34%

44% 44%


All large employers


Among large employers offering telemedicine:• 26% reported a utilization rate of 5% or higher in 2014• 47% agree that the telemedicine program has met their

objectives• 85% say that the most important reason for offering telemedicine

is to provide employees with a more affordable, convenient source of care

37© MERCER 2016

USE OF ACCOUNTABLE CARE ORGANIZATIONS (ACOs) IS RISING, BUT COST IMPACT NOT CLEAR TO MOST

10% 10%13%

29%25%

33% 34%

43%


All large employers


Among employers with 5,000+ employees offering ACOs*:• 80% offer an ACO as a standard health plan offering• 28% actively encourage members to seek care from the ACO• 16% report some cost savings achieved with the ACO; most

can’t measure


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GROWTH IN USE OF “CENTERS OF EXCELLENCE” AMONG LARGEST EMPLOYERS

22% 24% 25% 24%

37%41%

48%

35%


All large employers

Employers with 20,000+ employees

39© MERCER 2016

TYPES OF COEs CURRENTLY USED OR BEING CONSIDERED

76%

39%

18% 17%

51%

31%

14%

27%19%

26% 23%

34%

Transplants Cancer Women's health(infertility,

pregnancy)

Neonatal care Bariatric Surgery otherthan transplants

Currently use

Considering

Among employers with 5,000+ employees offering COEs*:

• 79% say they are likely to expand COE use in the future


40© MERCER 2016

MEDICAL HOMES GROWING MORE SLOWLY, BUT THE LARGEST EMPLOYERS SHOW STRONG INTEREST

5%7% 7%

17%13%

20% 21%

30%


All large employers


Among employers with 5,000+ employees offering patient-centered medical homes*:• 33% actively encourage members to seek care from a

medical home• 81% report that the amount of savings achieved from using

medical homes is not known


41© MERCER 2016

WORKFORCE HEALTHHOW AN EMPLOYER INFLUENCES BEHAVIOR, HEALTH AND WELL-BEING

Three pillars of well-being:

physical, emotional, financial

Physical environment can make the healthy choice the easy

choice

Activity trackers, mobile apps bring health

consciousness into daily life

Culture of health and social

connections key to building intrinsic

motivation

Employers starting to measure

well-being VOI as well as ROI


HEALTH ADVOCACY IS INCREASINGLY RECOGNIZED AS A CRITICAL RESOURCE IN A COMPLEX HEALTH CARE SYSTEM

Percent of large employers offering program

79%68%

40%32%

0%

52%

80%77% 71%

36% 39% 42%56%

83%

2014 2015

Phone/web health coaching

Face-to-face health coaching

Sleep disorder treatment

Resiliency/stress management

program

Disease management

Health advocate

Health assessment

NA

Addressing the continuum of health needs

43© MERCER 2016

31%

29%

26%

27%

59%

Financial calculators to assist with managing personal/family expenses

Tools or resources for retirement planning

Financial planning tools for budgeting or debt management

RESOURCES TO HELP EMPLOYEES IMPROVE THEIR FINANCIAL HEALTH

Large Employers

Other financial resources

No financial resources provided


INNOVATIVE TECHNOLOGIES AND ACTIVITIES FOR A MORE ENGAGING MEMBER EXPERIENCE

A C T I V I T I E S

All large Employers

Employers with 20,000+ Employees

Worksite biometric screening event 56% 71%

Business unit/location group challenges 45% 57%

Onsite exercise or yoga classes or weight loss programs (such as Weight Watchers)

43% 76%

Personal challenges 40% 55%

Peer-to-peer support 19% 33%

T E C H N O L O G Y- B A S E D R E S O U R C E S

All large Employers

Employers with 20,000+ Employees

Mobile apps 30% 44%

Wearables/apps to monitor activity 24% 38%

Devices to transmit health measures to providers 4% 11%

Onsite kiosks 7% 12%

Other web-based resources/tools 40% 63%


BUILDING A CULTURE OF HEALTHSIX POLICIES THAT PROMOTE EMPLOYEE WELL-BEING

Large Employers

15%

21%

34%

45%

58%

68%Support healthy-eating choices

Tobacco-free workplace

Work environment explicitly encourages physical activity

Support work-life balance (with flex-time, job share, etc.)

Employees may take work time for physical activity, stress relief

Promote responsible alcohol use

1

2

3

4

5

6


EMPLOYERS USE FINANCIAL INCENTIVES TO DRIVE PARTICIPATION RATES IN KEY PROGRAMS

Large Employers

Large employers using incentives report higher

participation rates.

48%

20%

52%

26%

12%22%

Large employers offering incentives

Large employers not offering incentives

Health assessment completion rate

Lifestyle management program participation rate*

Validated biometric screening rate

54%

40%27%

Healthassessment

Validatedbiometricscreening

Lifestylecoaching

Offer incentives (among employers with programs)

Including spouses builds engagement:• 62% of employers make key

elements of program available to spouses (up from 56% in 2014)

• Half of those make spouses eligible for incentives

*Average % of identified persons actively engaged in program


12%15% 17%

21% 22%24%

37% 38%

46% 44%

2011 2012 2013 2014 2015

All large employers


EMPLOYERS MAY BE COOLING ON TOBACCO-USE INCENTIVES IN WAKE OF REGULATORY QUESTIONS

Offer lower premium contributions to non-tobacco users

Median reduction in annual premium: $500


CONSIDERING “VALUE OF INVESTMENT” (VOI) AS WELL AS ROI MEANS DEVELOPING NEW METRICS

Employers with 20,000 or more employees

44%56%

Over two-fifths have attempted to measure program impact…

Have measured

VOI

17%

25%

25%

26%

44%

66%Positive impact on medical cost trend

Improved productivity

No positive impact was found so far

…with the majority of these reporting improvement in medical plan trend and/or other areas

Improved attraction and retention

Positive impact on disability cost trend

Improved employee satisfaction


PRIVATE HEALTH BENEFIT EXCHANGES GAIN A FOOTHOLD AS INTEREST CONTINUES TO BUILD

Large Employers

4% 4%

13%

6%8%

15%

27%24%

17%

For active employees For pre-Medicare-eligible retirees* For Medicare-eligible retirees*

Use nowUse now / planned for 2017Considering using within 5 years

* Among current retiree medical plan sponsors


MERCER MARKETPLACE FOOTPRINTUNSURPASSED GROWTH


MERCER MARKETPLACEAVERAGE SAVINGS RESULTS

9%

Cost Levers

1.6% 56%

Average Year 1EmployerSavings

AverageYear 2 and 3

Cost Increase

Employees Enrolled in

High DeductiblePlans versus 25%National Average

More Informed Employees

Purchasing Power

Breadth of Carrier andNetwork Offerings

Defined Contribution

Wellness and ImprovedCare Management

Buying Coalitions

$975

Average Year 1Per Enrolled

Employee Savings

9% 1.6%$975

52© MERCER 2016

56% OF EMPLOYEES ARE ELECTING HIGH DEDUCTIBLE PLANS

3%

15%

25%

26%

26%

4%

$0 deductible plan

$350 deductible plan

$800 deductible plan

$1,500 or $1,850 deductible plan



53© MERCER 2016

ABOUT ONE THIRD OF EMPLOYERS ARE USING A DEFINED CONTRIBUTION STRATEGY

Employer subsidy strategies in place as of January 2016

70%

30%

Defined Benefit Defined Contribution

Defined contribution amounts provided by employers often vary within their population.

Most common differences are:

• Family tier

• Employee salary

• Employee category

54© MERCER 2016

SUPPLEMENTAL HEALTH COVERAGE SUPPORTS CONSUMER PURCHASE OF HIGHER-DEDUCTIBLE PLANS

Summary of January 2016 elections. Percentages represent the prevalence of election within the supplemental health policies.

44%

26%

30%

Supplemental Health Purchases

Accident Hospital Indemnity Critical Illness

36% of employees enrolled in an $800 or greater deductible medical plan also purchase at least one supplemental health policy.


GIVEN HOW STRONGLY EMPLOYEES VALUE HEALTH BENEFITS, EVEN SMALL EMPLOYERS PLAN TO STAY IN THE GAME

Percent of employers that say they are “very likely” or “likely” to terminate plans within the next five years

21%

6%

15%

4%7%

5%

201320142015

Employers with 50-499 employees

Employers with 500 or more employees

EMPLOYEE BENEFIT TRENDS€¦ · Millennials (Age 34) Traditionalists (Age 70–87) Base pay...

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