Value-Based Plans Gain Popularity Among Employers

According to a new report supported by the Robert Wood Johnson Foundation, employers are seeking new ways—such as value-based insurance plans—to manage the rising health care costs as well as improve employee health.

Currently, employer-sponsored health insurance coverage accounts for roughly 49% of insured patients across the United States. According to the report, developed by Andrew Olsen, MPP, project leader of the Health Policy Hub at Duke Clinical Research Institute, and colleagues, “if the U.S. health system is to be transformed into one that rewards value, then employers must not only participate in the transition, but play a leading role.”

The employer-sponsored market faces the same high health care prices as the rest of the system. According to the report, the average premium for an individual is roughly $7000 and for families it is almost $19,000. These premiums have increased by almost 20% in the last 5 years. Further, more than half of works have an annual deductible over $1000, which is up 34% since 2012.

Through the use of high-deductible plans—which are supposed to shift costs, improve patient education and reduce unnecessary care—employers have tried to contain rising health care costs over the past decade. Although these efforts have kept costs for companies under control with a relatively modest cost increase, a survey found that one-third of smaller employers faced double-digit health insurance increases in 2017. Further, employers can only do a small share of cost-shifting before it begins to negatively affect employee health care.

According to the new report, many employers rely on third parties in order to improve value. These third parties often assist in the managed of population health and also provide care for patients with chronic diseases. In addition, employers receive help in order to create payment reforms, identify high-value providers, and help employees navigate health care. However, these efforts are limited by finances, implantation issues and navigating change management, the report suggests.

Despite these obstacles, employers and businesses face fewer regulations than public plans. Although it is unknown how this sector will grow as competition increases, it currently plays an important role in developing new technologies, the report suggests.

“Employers have an interest in the value of care not only because they help pay for their employees’ health insurance coverage, but also because better employee health means fewer missed days of work and better productivity,” the authors of the report wrote.

—Julie Gould

For articles by First Report Managed Care, click here

To view the First Report Managed Care print issue, click here