The Employer adoption of account-based health plans (ABHPs), has seen a significant increase over the last five years. As employers continue to see their value in helping to control their health care costs and reducing the shared employee expense, the number of companies employing such plans during the last five years has grown from 20 to 69 percent of companies offering employee benefit health care plans.
Both the employer as well as the employees are experiencing a clear cut advantage through the use of these plans. The usual premium cost for an ABHP plan comes to $8,927 per employee per year. This is actually 13 percent less than the average cost of a traditional plan and those portions of the fund that are not used can be rolled forward to cut down the future costs of out-of-pocket expenses. And as noted above, the reduced cost of these plans acts to provide employers with a solution for keeping family benefit values under the proposed cap of $21,000 for the excise tax.
Since these are programs that are essentially different from traditional type plans, employers are having varying degrees of success with them. it is the brought performing companies that seem to be having greater success at meeting their objectives:
55 percent of the higher performing companies versus 32 percent of the lower performing ones say that their ABHPs are successful in controlling employer costs.
Also 48 percent versus 20 percent are saying that their ABHPs are successful in controlling employee costs.
The higher performing companies are enjoying a financial advantage as well as protection from possible cost hikes that may be brought about through health care reform. As in prior years, the Towers Perrin Health Care Cost study has identified broad variations in the costs that both the higher and lower performing companies are facing. This is the fifth year of this performance analysis and the 2010 survey data reinforce an ongoing but significant difference between health care costs facing high and low performers. In general high performers are paying 16 percent or roughly $1,800 per employee for their healthcare benefit programs. According to this cost differential a high-performing organization that has 10,000 employees who are enrolled in a health plan, would be spending $18 million less annually on average their lower performing competitor.
Dave Guilmette who is the managing director of Towers Perrin Health and Welfare, is saying that this cost differential is very real, and especially in today's market, will have a major impact on a company's ability to compete. He adds that the affect of the cost differential is extended beyond company expenses and revenue to employees, and that this has the affect of widening the affordability gap. This means that the employees at the lower performing companies will be paying nearly 20 percent more for their health care in 2010.
Towers Perrin Principal, Ron Fontanetta says that in the current health care reform situation, high performers' benefit management decisions are actually buying them significantly more time before they reach the proposed excise tax cap. He adds that when this is combined with an ABHP, there would be a role cost advantage for high performers would now be able to insulate their company from the excise tax cap for four more years than their lower performing peers. The higher performing companies are set to take full advantage of this benefit: Already approximately 67 percent of these companies are offering ABHPs, as compared with just 40 percent of the low performers.
Tags: health insurance