Impact of Healthcare Costs on Employers and Christan Royer Director of Benefits, Indiana University their Employees
Total family premiums for employer health plans are rising. WOODGROVE Source: https://www.wsj.com/articles/employer-provided-health-insurance-approaches-20-000-a-year-1538575201 2 BANK
Employer premiums have risen, and so have employee contributions. *Estimate is statistically different from estimates for the previous year shown (p<.05). WOODGROVE SOURCE: KFF Employer Health Benefits Survey, 2018; Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 1999-2017 3 BANK
Employee premiums for family coverage are growing faster than median income. Source: https://www.washingtonpost.com/opinions/health-care-rules-the-labor-market/2018/09/02/05d13672-ad2f-11e8-b1da-ff7faa680710_story.html?utm_term=.254e58c8f444 WOODGROVE 4 BANK
Employee costs for employer coverage are growing faster than median income. *Estimate is statistically different from estimates for the previous year shown (p<.05). SOURCE: KFF Employer Health Benefits Survey, 2018; Kaiser/HRET Survey of Employer-Sponsored Health Benefits. 1999-2017. Bureau of Labor Statistics, Consumer Price Index, U.S. City WOODGROVE Average of Annual Inflation (April to April), 1999 – 2018; Bureau of Labor Statistics, Seasonally Adjusted Data from the Current Employment Statistics Survey, 1999 – 2018 (April to April). 5 BANK
HEALTHCARE Indiana University SNAPSHOT 6
Employer healthcare costs are growing $300 $280 $250 $248 The IU $233 healthcare $219 $200 $207 budget has Millions increased $150 35% $100 in 4 years. $50 $0 2014 2015 2016 2017 2018 WOODGROVE SOURCE: IU Annual Open Enrollment Publications 7 BANK
Employee premiums are not affordable • Annual Salary: $40,000 • Medical Plan: HDHP with HSA $2,005.56 • Level of Coverage: Family $1,862.16 $1,781.40 $1,746.36 • Employee premiums for family coverage $1,651.18 increased by 52% over the past 6 years. $1,561.62 • That’s an average increase of 8% annually. • Premium contributions consume about $1,320.48 5% of the employee’s base salary. Annual Medical Premium SOURCE: IU Annual Open Enrollment Publications WOODGROVE 8 BANK
Rising PEPY costs Employee Pays Employer Pays $11,393 $2,427 $8,966 2013 PEPY costs 2014 $2,427 $10,090 $12,517 increased 30% 2015 $2,523 $10,349 $12,872 from 2013 to 2017. 2016 $2,546 $11,453 $13,999 2017 $2,552 $12,194 $14,746 SOURCE: IU Claims Data, Med and Rx, Paid March 2013 through February 2018 WOODGROVE 9 BANK
Healthcare cost outpaces employee pay and inflation. Employee Pay Increase Overall Inflation Avg Healthcare Trend 9.00% 8.00% 8.00% 7.40% 7.10% 7.00% 6.30% 6.30% 6.00% 5.00% 4.00% 2.50% 3.00% 2.30% 2.30% 2.00% 2.00% 2.00% 1.30% 2.00% 2.00% 0.70% 1.00% 1.50% 0.00% 2013 2014 2015 2016 2017 Source: IU Data,, Fiscal Year 2013- 2017; Mercer’s National Survey of Employer-Sponsored Health Plans; Bureau of Labor Statistics, Consumer Price Index, U.S. City Average of Annual WOODGROVE Inflation (April to April) 1993-2017. 10 BANK
Skyrocketing outpatient PEPY costs $4,500 18% $4,000 16% $3,500 14% $3,000 12% $2,500 10% $2,000 8% $1,500 6% $1,000 4% $500 2% $0 0% Feb 2013 - Jan Feb 2014 - Jan Feb 2015 - Jan Feb 2016 - Jan Feb 2017 - Jan Feb 2018 - Jan 2014 2015 2016 2017 2018 2019 Net Pay PEPY Facility Outpatient Net Pay PEPY Facility Outpatient % Change WOODGROVE 11 BANK
Impact of healthcare costs on employers and employees • Healthcare expenditures are a large proportion of employer budgets • Costs are growing rapidly on a per employee basis, at rates This is far above the cost of living NOT • These increases are challenging the ability to provide sustainable. raises to employees • To shield employees at IU, a greater proportion these costs have shifted to the employer’s budget over time Employers can’t keep doing the same thing and expect different results. WOODGROVE 12 BANK
Employers are nearing the end of their ability to improvise. IF YOU CAN’T AFFORD TO SEE A DOCTOR, YOU GET REFERRED TO THE AIRPORT FOR A FREE X-RAY AND COMPLETE “ENHANCED PAT - DOWN.” https://www.healthcareittoday.com/2016/03/18/health-it-humor-fun-friday/ WOODGROVE 13 BANK
Levers for employers to adjust FUTURE CURRENT Contracted Medicare Increase Premiums Plus Pricing Health Savings Narrow or Tiered Account (HSA) Networks Direct Contracting Deductible and Out- with Providers of-Pocket Maximums WOODGROVE 14 BANK
Impact of Hassan Azar Kathy Donnenson Healthcare Chief of Health Plan Administration Division, California Senior Vice President, Total Costs on Rewards US Foods Public Employees Retirement System (CalPERS) Employers and their Employees Dawn Kopacz Nicole Williams Manager of Health Care Plans, Director, Cummins Global General Motors Clinical Strategy WOODGROVE 15 BANK
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