Workspan logo
Workspan Daily |

Another 5% Hike Driving Companies to Call for Health-Care Changes


Health-care costs are expected to approach $15,000 per employee in 2019 and as a result, U.S. employers are examining ways to alter the system.

A survey by the National Business Group on Health of 170 large employers (more than 19 million employees/dependents) found a majority of employers believe virtual care and technology will play a major role in how health care is delivered in the future and that new providers will be needed to help make the marketplace more buyer friendly.

The “Large Employers’ 2019 Health Care Strategy and Plan Design Survey” revealed that employers project the total cost of providing medical and pharmacy benefits will rise 5% for the sixth consecutive year in 2019. Including premiums and out-of-pocket costs for employees and dependents, the total cost of health care is estimated to be $14,099 per employee this year and projected to rise to an average of $14,800 in 2019.

Employers will cover roughly 70% of those costs; employees will bear about 30%. Employers cited high cost claims, specialty pharmacy and specific diseases as key drivers of cost increases.

“Health-care cost increases continue to outpace workers’ earnings and increases in inflation, making this trend unaffordable and unsustainable over the long term,” said Brian Marcotte, President and CEO of the National Business Group on Health. “No longer able to rely on traditional cost-sharing techniques to manage costs, a growing number of employers are taking an activist role in shaking up how care is delivered and paid for.” 

Nearly half of respondents (49%) are either driving changes in the delivery system directly or through their health plan, leveraging digital solutions, or both. For example, 35% are implementing alternative payment and delivery models such as accountable care organizations (ACOs) and high-performance networks (HPNs) either directly or through their health plan. Direct contracting with health systems and providers is expanding, from 3% in 2018 to 11% in 2019. Direct contracting between employers and centers of excellence (COEs) is also rising sharply, from 12% this year to 18% next year. Cancer, cardiovascular and fertility COEs are experiencing the greatest growth.

More than half of employers (52%) believe virtual care will play a significant role in future health-care delivery while 43% predict artificial intelligence (AI)d will play a major role. In fact, half of employers (51%) identified implementing more virtual care solutions as their top health care initiative in 2019.

The survey also found nearly all employers think the pharmaceutical supply chain needs to change — 14% said it needs to be more transparent, 35% stated rebates need to be reduced, while 50% stated the pharmaceutical supply chain is inefficient and too complex and needs to be overhauled and simplified. Additionally, three in four employers do not think drug manufacturer rebates are an effective tool for helping drive down pharmaceutical costs and more than 90% would welcome an alternative to the rebate-driven approach to managing drug costs.

More than half of the survey respondents are concerned that rebates do not benefit consumers at the point of sale. A growing number of companies (27%) are adopting recently developed capability by pharmacy-benefit managers to pull rebates forward at the point of sale to benefit consumers. Another 31% are considering implementing point-of-sale rebates in the next few years.  

Also for the first time, employers are retrenching somewhat on account-based plans, though they are still widely offered. Employers offering full replacement consumer-directed health plans will shrink from 39% this year to 30% in 2019, the first time in four years fewer employers will offer these plans.

Other survey findings include:

  • Industry consolidation impact.  While 26% of employers are optimistic that mergers between health plans and Pharmacy Benefit Managers will lower costs while improving quality and consumer experience, the majority of employers are skeptical that they will see improvement from consolidation.
  • Opioids in the workforce concern. 55% of employers are very concerned about the impact of prescription opioid abuse on the workforce. Employers are working with their partners to implement multiple strategies to change prescribing patterns and increasing access to alternative therapies.
  • Behavioral health benefits expansion. Three in 10 large employers plan to conduct anti-stigma campaigns next year to reduce the stigma that exists around mental health conditions and treatment. More than half will offer self-directed online resources.

Have Questions?


+1 877 951 9191

USA and Canada

+1 480 951 9191

Other Countries


Chat currently unavailable.

Email Us