More firms offering health spending accounts
The outlook for corporate insurance in the long term is less certain.
Only about 26 per cent of large employers surveyed were very confident their company will offer health-care benefits in 10 years. That is a slight increase from last year's 23 per cent, but a sharp drop from 73 per cent five years ago.
About one-half of the people in the U.S. who have health insurance receive it from their employers. Most of the rest are enrolled in individual plans or government Medicare and Medicaid programs.
More people are expected to buy health insurance at government-run electronic marketplaces, which will start selling plans for 2014 later this year as part of the 2010 U.S. Affordable Care Act.
Consultancy Towers Watson and the National Business Group on Health conducted the annual survey of more than 500 of the nation's largest employers, who self insure, or pay for employee health-care treatments. The companies were surveyed between November and January, a time when 2013 health plans went into effect and as companies plan for 2014.
During the next five years, 60 per cent of large employers said it was not at all likely they would discontinue health-care plans for full-time employees and send them to the government exchanges with a financial subsidy for insurance.
Also, 82 per cent said they think it was highly unlikely they would direct full-time employees to exchanges without a subsidy.
The Affordable Care Act has implemented a wide range of new rules. More services must be included in plans. Also, companies will need to offer health-care insurance to all employees who work more than 30 hours per week or be forced to pay a tax. Because the tax is less than the cost of health care for them, some companies may pay the tax instead.
"There will definitely be employers who will be looking to move certain segments of their workforce towards the public exchanges and those segments could be early retirees and they could be part-timers working under 30 hours," said Randall Abbott, senior consultant at Towers Watson.
Among companies where 20 per cent or more of their workforce are part time, 29 per cent said it was highly likely that in the next five years they would end health-care benefits for employees working less than 30 hours per week. Sixty-seven per cent said it was unlikely.
The survey found the average premium cost for employers and employees combined rose about six per cent in 2013 from 2012. Employees paid, on average, $2,888 in annual premiums, up about 8.7 per cent from 2012.
Total spending on health care in the United States was about $2.7 trillion, and is rising at a rate of about six per cent per year, although last year it was only about four per cent.
Companies trying to cut health-care spending have turned to wellness initiatives, such as charging smokers surcharges. Also, health plans are discouraging health-care overspending by employees by putting more of the costs on them.
For instance, instead of paying a monthly premium and a co-pay for doctor visits, many employees may pay a lower monthly premium and then pay for the doctor visit out of a special tax-free savings account until they reach a higher-than-usual deductible.
These consumer-directed health plans in which employees have a tax-free health spending account made up 30 per cent of most large employers' health plan enrolment in 2013, up from 25 per cent in 2012, the survey found.
About 53 per cent of employers offer the plans now and 67 per cent plan to do so in 2014. It will be the only option at 23 per cent of employers in 2014.
In addition to cutting spending, employers cite the Affordable Care Act's 2018 excise tax as the motivation for the plans, according to Abbott of Towers Watson. The tax, often called the Cadillac tax, is expected to apply to companies that offer high-priced plans as a way to discourage overspending on health care.