Large Employers Anticipate 6 Percent Hike In Health Benefit Costs In 2017

NBGH survey cites specialty drugs and high-cost employees as the top cost drivers.

It could be worse. That’s the takeaway from a new survey of large employers that anticipate that their health benefit costs will rise 6 percent in 2017—the same increase they’ve anticipated for the past two years following a 7 percent rise in 2014.
The Washington-based National Business Group on Health conducted the annual survey, this year drawing responses from 133 large companies employing a total of 7.2 million workers and insuring more than 15 million covered lives. The NBGH released the Large Employers’ 2017 Health Plan Design Survey this week.
As in the previous two years, surveyed employers project that they will be hit with a 6 percent increase in health benefits costs in 2017 but changes in their health plan design will shave a percentage point off that to 5 percent. That’s in line with the projected 5.1 percent increase in national health expenditures in 2017 recently projected by the federal government.
Asked to rank the factors driving their anticipated hike in health benefit costs in 2017, the employers cited specialty pharmacy (80 percent), high-cost claimants (73 percent) and specific diseases/conditions (61 percent) as the top three factors by a wide margin. A distant fourth and fifth were overall medical inflation (29 percent) and hospitalization (18 percent), respectively.
Not surprisingly, the health benefit design changes employers are implementing to control their health benefit costs target those problem areas. The three “most effective” tactics cited by the employers to control their health benefit costs were: pharmacy management techniques (68 percent), initiatives to improve employee well-being (34 percent) and increased employee cost-sharing (34 percent).
Regarding high-priced specialty drugs specifically, the surveyed employers are taking a number of additional steps to control spending. For example:

  • 74 percent have implemented more aggressive utilization management protocols for specialty medications
  • 69 percent now require specialty medications to be obtained through a specialty pharmacy
  • 38 percent have a pharmacy plan design that includes a specific tier for specialty medications

The NBGH survey findings dovetail with concerns over specialty drug costs detected in other employer surveys and reports. United Benefit Advisors recently reported that 44.1 percent of employers added a fourth tier to their drug benefits plan in 2015 for specialty medications, up from 27.9 percent in 2013. A recent study in Health Affairs found that the percentage of employers’ prescription drug spending attributable to specialty medications rose to 43.2 percent in 2014 from 11 percent in 2003.