but what do benefit executives think about the current healthcare landscape?

2Entire contents © 2008 Forrester Research, Inc. All rights reserved.

But what do benefit executives think about the current healthcare landscape?


We asked benefits executives just that . . .

• Annual survey conducted in partnership with Employee Benefit News (EBN)

• Approximately 910 respondents participated in this year’s survey

• Respondents include benefits executives across North America

• Variety of company sizes, industries and geographies represented


• Benefits and cost containment trends

» Growth/decline in benefits offered

» Cost containment strategies used

• Growth in Disease Management and Health/Wellness benefits

• Leading CDH plan structures

Agenda


• Benefit richness is being diluted, but not at the expense of preventative care and growth in the consumer-directed health market


Top benefits currently offered mirror 2006

•Prescription Benefits

•Preventative care (e.g., annual physical)

•FSA for employee health expenses

•Health and wellness benefits or programs (e.g., smoking cessation)

•Structured disease management programs (e.g., programs for diabetes or depression)


Small employers struggle to offer these key benefits

Prescription benefits

Structured disease management program

Health and wellness benefits or programs

Preventative care

FSA for employee health expenses

97%100%

99%

Which of the following benefits or programs does your company offer to/provide for employees

Base: all respondents who provide employees health insuranceSource: 2007 EBN/Forrester Benefits Decisions’ Impact Study

85%86%

92%

50%83%

92%

37%

56%67%

47%

53%70%

Small companies (less than 99 employees)

Medium companies (99 too 999 )

Large companies (999+ )


• Tried and true cost containment strategies remain

» Use of formulary or benefit design to encourage the use of more favorably priced medication

» Increase generics utilization

• But employers of all sizes continue to lean on cost-sharing and increasingly dilute benefits


Source: 2007 EBN/Forrester Benefits Decisions’ Impact Study

Currently use cost sharing as strategy

Plan to use cost sharing as strategy

Small employers(less than 99 employees)

Medium employers (99 too 999 )

Large employers(999+ )

Large employers most likely to turn to cost sharing as containment strategy

53% 22%

64% 16%

69% 13%


. . .but small employers are reducing benefits

Base: all respondents who provide employees health insurance


Currently reducing benefits as containment strategy

Plan to reduce benefits as containment strategy




27% 16%

24% 10%

24% 11%


What other perks are employers looking to reduce?

• Retiree health benefits» 17% of large employers, and 15% of small, either currently or intend on eliminating retiree health benefits

• Spousal coverage» 26% of large employers, and 21% of small, either currently or intend on requiring spouses to go on own plan if available

Less than 2% of employers, across all sizes, say they intend to stop offering health insurance in entirety


Will consumer-directed health plans and preventative health save the day?

. . .many benefits professionals think so and continue to increase wellness

offerings while cementing their CDH platforms


Currently offer Plan to offer within the next two years


2006

2007 54% 14%

50% 15%

:

Which of the following benefits or programs does your company offer to/provide foremployees? Structured disease management programs?


Growth continues in the disease management market


Employers tackle most expensive, chronic conditions

• Diabetes

• Asthma

• Cardiovascular and coronary artery diseases

• High risk pregnancy

• Depression

• Back pain

• Obesity


Gaps exist in measurements of DM

• The biggest gap between what employers want to measure and what they actually measure lies in indirect cost categories:

» Duration of medical leaves

» Absenteeism

» Lost productivity


Employers increasingly offer health and wellness programs



2006

2007

Which of the following benefits or programs does your company offer to/provide foremployees? Health and wellness benefits or programs?

23%57%

21%54%



• The greatest overall growth in health and wellness programs comes from:

» Targeted education and support programs

» Nutrition education

» Health coaching

» Convenient diagnoses and monitoring opportunities


. . .in fact more than half of employers offer

• Smoking cessation

• Flu shots

• Health risk assessments (HRAs)

• Weight management/reduction

• Nutrition education

• On-site health screenings

• Stress management


Employer size defines the wellness market

• Company size matters in DM and wellness

» While 70% of large employers currently offer DM programs, only 37% of small companies do

» With health and wellness benefits, 67% of large employers are offering these benefits with only 47% of small


Why wellness and lifestyle programs?

• Cost, of course

But also . . .

• To promote a healthy workplace

• As part of a broader care management strategy

• Goodwill


Despite this intention, less than half offer incentives

Do you offer employees incentives to participate in DM or wellness programs?

48%Yes

52%No

Did you know?In 2006, 47% of employeesoffered incentives toparticipate in DM or wellnessprograms.



Those that do, offer cash

Which of the following incentives do you use to encourage DM or wellness participation?



The CDH market continues to mature

... and benefit executives are starting to

show their preferences


Employers favor offering a HDHP with HSA


23% 17% 40%

14% 10% 24%

12% 4% 16%

Health savings account (HSA)tied to a high-deductible (CDH) plan

Health reimbursement arrangement (HRA) tiedto a high-deductible (CDH) health plan

High-deductible health plan (HDHP) butwithout a savings/spending account



Which of the following benefits or programs does your company offer to/provide for employees


Perhaps because HSA products are expected to produce the greatest costs savings

Which of the following health benefits strategies does your company use to control costs?

Currently use Plan to use within the next two years

21% 19% 40%Health savings account (HSA)

tied to a high-deductible (CDH) plan

12% 12% 24%

12% 5% 17%High-deductible health plan (HDHP) but

without a savings/spending account



Health reimbursement arrangement (HRA) tiedto a high-deductible (CDH) health plan


Medium sized employers last to turn to CDH


Small companies (less than 99 employees)

Medium companies (99 too 999 )

Large companies (999+ )

Health savings account (HSA) tied to a high-deductible (CDH) plan

Health reimbursement arrangement (HRA) tied to a high-deductible (CDH) health plan

High-deductible health plan (HDHP) but without a savings/spending account

43%

29%

48%

19%

20%

31%

17%

14%

20%

Which of the following benefits or programs does your company currently offer or intend on offering within the next two years?


Do you offer a debit card program?


Debit cards offered by nearly half of employers


Why consumer-directed health?

• Cost, of course

But also because . . .

• Employers believe employees should be more responsible for their healthcare costs

• A desire exists to offer innovative benefits

• Employers want to encourage employees to live healthier


But not all employers are turning to CDH

• What are the main reasons employers chose not to offer a CDHP?

» Resistance from employees

» Employees not ready to be HC consumers

» Hesitancy to put more financial burden on employees

» Don’t believe the savings will be significant


Will you change your primary health plan next year?


Half of employers will stay with current health plan


But smaller companies are more hesitant

Will you change your primary health plan next year?





Yes

Don’t know

No

Maybe – we will put out to bid

2%4%

8%

33%43%

67%

54%40%

15%

11%13%

9%


Final thoughts

• Companies will continue to share the burden of rising premiums with their employees

• Preventative health and disease management will continue to grow and disease management vendors will expand (and improve) offerings

• HSA products will surpass other CDH products, often at the expense of other savings accounts such as FSAs

• . . .and in response, carriers will respond by focusing on flexibility in plan design and preventative health incentives


Thank you

Julie Snyder

(617) 613-6448

[email protected]

but what do benefit executives think about the current healthcare landscape?

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