Employer interest in offering defined contribution health plans is on the rise, a surprising trend some industry experts attribute to a more transformative approach to health care benefit strategy and one advisers and their employer clients should pay attention it.
Forty-two percent of employers now say they are considering a defined contribution approach and 9% of employers have already implemented one, according to the 2015 PricewaterhouseCoopers Health and Well-being touchstone survey. While a DC approach was once never considered in the health care benefit space, Barbara Gniewek, a principal at PricewaterhouseCoopers, told attendees of EBA’s Workplace Benefits Summit in Orlando, Fla. this morning, that rising health care costs and regulatory requirements are forcing employers to find a ‘better way’ of providing benefits and a DC approach is one of them.
See also: “
“There is a tremendous amount of interest in it and there wasn’t before,” she said.
“This is a transformative period in benefits strategy,” added Michael Thompson, also a principal at PwC, who says employers are struggling to meet regulatory requirements, keep health care costs down, and preserve the benefits employees desire.
Almost half of employers (49%) in the PwC survey indicated they will consider increasing employee contributions, while over 1/3 of employers (38%) said they are considering an HDHP only strategy, “Making consumer tools increasingly important,” Gniewek said.
See also: “
The percentage of employers reporting a HDHP as having the highest employee enrollment increased to 31% in 2015 (up from 17% three years earlier).
New approaches
Shifting care delivery dynamics and emerging provider strategies such as narrow networks can save significant money, Gniewek told attendees, adding that “Employers are afraid of the backlash, but it can save money.”
Employers should focus their health care strategy on health improvement, using consumerism to manage costs, and changing the care delivery system, she said.
Consumerism has evolved, she says, from making sure employees have “skin in the game” to providing tools that assist them in plan selection and navigating the health care system. This can include private exchanges, she says.
Approaches to improving the care delivery systems might include network optimization, offering narrow networks, or offering new delivery models such as telemedicine or accountable care organizations.
Lastly, employers should also be using high-tech, high-touch innovative tools to drive health improvement and consumerism. These include wearable technologies, value-based designs and reference-based pricing, as well as on-line platforms creating a unique user experience for care management and wellness.
