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The total cost of worker health benefits is expected to increase 5% in 2020, topping $15,000 per employee, according to the National Business Group on Health annual survey of nearly 150 of the nation’s largest employers.
To help curb costs, large employers are embracing some of the ideas being debated in Washington, such as passing drug price discounts directly on to workers.
They’re also increasingly open to the government playing a bigger role in controlling health costs — even expanding Medicare access under some circumstances, according to the survey, which covered benefits for 15 million people.
When open enrollment rolls around this fall, workers probably won’t find major differences in their overall health insurance coverage for 2020 but could see changes in their pharmacy benefits and new networks designed to steer them to the most cost-effective care.
Passing on drug discounts
Some 20% of large employers say they will switch next year from traditional pharmacy benefit contracts, which have relied on drugmaker rebates to hold down the costs of premiums. Instead, they’ll pass those pharmaceutical discounts directly to workers at the pharmacy counter. Some 60% plan to make the switch by 2022.
While some workers could see lower out-of-pocket costs for high-priced drugs, others could see higher cost-sharing for premiums.
But even with pharmacy benefit changes, employers are worried about how they’re going to pay for new gene therapies coming to market with record prices, like Novartis’ $2 million spinal muscular atrophy treatment Zolgensma.
“This is a new frontier, and employers aren’t sure what is the best course to address this. The frustration level around these prices is so high, employers would consider this as a place where the government should be stepping in — from a financing negotiation perspective,” explained Brian Marcotte, NBGH president and CEO.
Three out of four employers surveyed would consider backing a plan in which the government would negotiate for pharmaceutical treatments that cost more than $1 million, and nearly half would favor national funding to underwrite part of the cost for such drugs.
“That’s not something employers typically say,” noted Marcotte.
Direct contracting with doctors
More employers are contracting with hospitals that are considered centers of excellence for surgical procedures and treatment of cancer and other complex illnesses.
Nearly half of large firms surveyed say they are looking next year to contract directly with physician groups for so-called advanced primary care. They are paying physicians to take care of patients with chronic conditions for an overall fee, rather than paying for each individual visit.
For some physician groups that can mean going beyond office visits. Doctors contracted by one NBGH employer found that they were able to reduce one worker’s emergency room visits for asthma attacks by getting him help at home.
“They sent a cleaning team to that individual’s home to clean the house, change the air filters in an effort to reduce… asthma attacks that would lead to ER visits, and saw that following that, the ER visits significantly dropped off,” said Marcotte.
Medicare for older workers
One key health-care issue employers are watching in 2020 is the debate over Democratic Party “Medicare for All” proposals. More than 70% of those surveyed said they believe the universal health care proposals would reduce the number of uninsured but would also reduce the kind of health innovations that help lower costs. Four out of five employers believe it will also result in higher taxes.
“You’ve got 180 million people being covered by commercial insurance; making a transition from our model to a more socially based model is easier said than done,” Marcotte said. “So, there’s a lot of questions about how it will be addressed.”
While employers continue to believe they can do a better job providing benefits for their workers than the government can, they are split when it comes to extending Medicare coverage for older workers. More than half of those surveyed by NBGH would support expanding Medicare for people under 65. One in four supports lowering Medicare eligibility age to 60, while another 23 percent would favor expanding coverage starting at age 50.