December 22, 2015
The cost of pharmacy benefits has continued to rise and has increasingly become the focus of employers looking to manage medical benefit costs. Although pharmacy represented approximately 20% of employer-sponsored medical benefits costs this year, its cost is increasing and will account for 50% of medical cost inflation going forward.
This data comes from the 20th Annual Towers Watson/NBGH Best Practices in Health Care Employer Survey of 487 large U.S. employers.
Eric Michael, the Towers Watson U.S. central division pharmacy leader, specifically highlights specialty pharmacy as a reason for greater spending. “The price, utilization and delivery of specialty prescription drugs, many of which require special handling or delivery, are a top pain point for employers,” said Michael. “Frustrated by their lack of success in controlling these growing costs, employers are beginning to consider new aggressive approaches.”
Currently, more than a quarter (26%) of employers address specialty drug cost and utilization in their medical plan and that number is expected to triple in the next three years. Also, 53% of employers have added new coverage and utilization restrictions for specialty pharma and that will rise to 85 percent by 2018.
As we head into 2016, we will continue to see employers working to rein in pharmacy benefits cost, and putting policies in place to manage especially costly areas such as specialty pharma.
For the full press release, click here.
December 20, 2015
2015 is almost over, and it was another eventful year in health care. The most read blog posts on the OneExchange blog show the range of interests among readers of this blog.
Taken together, our series on Towers Watson exchange solutions leaders topped your list, with a post on the rise of account based health plans ranking a strong second. How employees are under-utilizing Employer Assistance Programs (EAPs) also landed near the top of the list.
A bit further down, the U.S. Supreme Court’s historic 6-3 decision in the case of King v. Burwell captured your attention. The decision reaffirmed allowing subsidies on both state and federal exchanges, ensuring that a key provision of the Affordable Care Act (ACA) — one that is largely responsible for the gains in insuring the uninsured — would remain in place. Director of Policy Affairs for Towers Watson’s Exchange Solutions, John Barkett, explained the case’s implications in our blog post on the topic.
You also were interested in public sector adoption of private retiree exchanges, as evidenced by the popularity of posts on the Ohio Public Employees Retirement System OPERS and Alameda County in California announcements that they were transitioning their retirees to OneExchange. Towers Watson’s acquisition of Acclaris, a provider of software-as-a-service (SaaS)-based technology and services for consumer-driven health plan and reimbursement accounts, also garnered interest as did the news that Towers Watson was a founding member of the Association of Web-Based Health Insurance Brokers (AWHIB), formed to advocate for policies that would enhance the efficiency of web-based brokers when they enroll people in public exchange insurance plans.
2016 will be another busy year for health care, especially as the U.S. elects a new president. Aside from this major event, next year’s hot topics remain to be seen.
Happy Holidays and Happy New Year!
December 17, 2015
Recent research from The Commonwealth Fund, a private foundation that aims to promote a high-performing health care system, explored how the ACA’s reforms of the individual health insurance market are working. Researchers compared the cost of subsidized plans offered on public exchanges with non-subsidized plans available off exchanges to determine the validity of early concerns that lower risk customers would prefer off-exchange plans. If that were to happen, the number of individuals needing government subsidies and subsidy amounts for plans on exchanges would increase — thwarting the ACA’s goal of offering good coverage at relatively low prices on public exchanges.
In fact, just the opposite has proven to be true. Richer plans that typically appeal to people with health problems make up a greater proportion of plans sold off exchanges than on them. According to the researchers, this means that the ACA’s provisions that discourage this type of risk segmentation are working.
Premium increases tell the story
To make this determination, researchers looked at 2015 premium increases, based on insurers’ federal filings for ACA-compliant plans both on and off exchanges. They found that the average premium for plans in the individual market increased $30 per person per month overall, with the average premium for plans purchased off exchanges ($34) higher than for on-exchange plans ($29). The reason for this premium increase differential has to do with the different preferences of purchasers, such as access to specific doctors or hospitals, which are met by plans bought directly from carriers compared with plans purchased on the public exchanges.
With the ACA, all plans are “guaranteed issue,” which means no one can be denied coverage because of preexisting conditions. This is great news for individuals who might have been denied coverage in the past due to an existing illness or chronic condition. However, the cost to the carriers of accepting everyone is higher.
On public exchanges, the higher cost is mitigated by restricting the doctors and other medical service providers that are considered “in-network,” a practice known as narrow networks. Off-exchange plans, which are offered directly by carriers, are not similarly constrained, giving purchasers access to a wider range of service providers — an appealing feature to people with existing health problems and established relationships with doctors and other providers.
The complete report is available from The Commonwealth Fund’s website.
December 16, 2015
Two Towers Watson surveys reveal a notable disconnect between what retirees believe they were told by their employers about their retirement medical benefits when they retired and what employers say they offered retirees in education and information.
In March 2015, Towers Watson surveyed 3,384 retirees aged 65 and older who formerly worked at large and midsize employers. Previously, in September 2014, Towers Watson surveyed 144 HR executives at large and midsize employers that sponsor retiree medical benefits. The retiree survey showed that 43% said their employers took no steps at all to help them understand and manage the cost of retiree medical benefits before they retired; the employer survey showed that just 9% of employers acknowledged they offered no help.
Other issues that retirees claimed employers did not discuss with them included the reality of out-of-pocket costs, and financial planning resources and decision support tools that would be available to them.
According to John Barkett, a director for Towers Watson’s Individual Exchange line of business, the disconnect points to the need for employers to redouble their efforts to make sure retirees have crucial information that could affect their financial health in retirement.
“It’s evident that employers can do a better job of educating employees about retiree medical costs and benefit options as well as explaining more clearly the support retirees can expect with benefits after they’ve stopped working,” said Barkett.
For the full press release, click here.