Exploring Options to Manage Rising Healthcare Claim Costs

As healthcare claims costs are expected to continue to rise, employers are exploring options that can help them manage costs, such as launching private exchanges.

The recent survey from Wells Fargo reported that employees can expect to continue to pay more for healthcare plans, facing higher deductibles and copays. Since a survey of more than 70 insurance companies found overall claim costs will increase next year, it is expected employers will have to pay higher rates, according to Wells Fargo.

“Employers are exploring all available options to maintain and improve the health risk of employees, mitigate cost, and maximize their benefit investment,” Dan Gowen, national practice leader with Wells Fargo Insurance’s Employee Benefits National Practice, said in a statement.

Survey results indicate that the top employer product innovations this year are Accountable Care Organizations, increased wellness programs, and narrow provider network offerings. Nearly half (47%) of respondents expect to launch their own private exchange by 2015.

“We’re finding that employers are considering private exchanges and defined contribution strategies to manage rising costs,” Nick Allen, national practice leader for Actuarial Services with Wells Fargo Insurance, said in a statement. “Defined contributions strategies are often just shifting cost to employees, and private exchanges are an option, but may do little to change health care utilization behaviors. Product innovation and consumer engagement remain critical in creating a culture of smarter health care spending.”

Based on claim activity over a 6-month period, Wells Fargo projects the following increases in the average cost of claims:

• HMOs: 7.5%

• Point-of-sale: 7.7%

• PPOs: 8.3%

• Consumer-driven health plans: 8.6%

• Exclusive provider organizations: 8.9%

• Indemnity plans: 9.5%

• Prescription plans: 8.6%

Over the last 2 years prescription costs have steadily increased. This trend is expected to continue because of the higher cost and use of specialty biotech drugs combined with the fact that fewer generic drugs are coming to market.