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Employees could finally get a break on their health costs

An insurance agent in Miami discusses plans available through the Affordable Care Act.
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An insurance agent in Miami discusses plans available through the Affordable Care Act.

For years, employers have reined in health-care spending by shifting more of the costs to their workers, but two new health benefits surveys show this strategy may be shifting a bit.

"I think many employers are at the end of what they're comfortable with, in terms of shifting cost to employees," said Tracy Watts, a senior partner at benefits consulting firm Mercer.

Large employers see underlying health-care costs rising 5.5 percent in 2017, according to preliminary data from Mercer's survey of more than 1,200 companies. However, the companies expect to hold their net cost increase to just 4 percent, on average, through changes in benefit plans.

"That's a smaller gap than we've seen in the last 10 years," said Beth Umland, director of research for Mercer's Health and Benefits unit. That 1.5 percentage point difference between expected underlying and net costs is about half the average reported since 2008.

Part of the reason may be the reprieve of the so-called Cadillac tax under the Affordable Care Act, she said. Over the last five years, employers have been altering benefits in anticipation of excise tax on high-cost health plans due to begin in 2018.

"Employers had been needing to not just slow cost growth, but in some cases, lower their actual costs, because the excise tax kicks in at a certain dollar amount, " Umland explained.

Last year, Congress pushed back implementation of Obamacare's Cadillac tax as part of a budget deal, allowing employers room to give workers a break.

One area workers will see more cost-sharing is when it comes to dependent care. Nearly half of large employers plan surcharges for working spouse coverage in 2017, up from 28 percent this year, according Willis Towers Watson's latest health-care employer survey.

Benefits experts say next year employers are focused on ramping up efforts to control the underlying drivers of health costs.

"Employers will focus primarily on changing coverage provisions for costly services," said Julie Stone, health care practice leader at Willis Towers Watson.

Nearly 90 percent of employers are focused on programs to target high-cost specialty drugs, she said.

Longer-term, large employers are increasingly looking to use their market power to get better pricing on everything from specialty drugs to diagnostic imaging services and surgical procedures such as knee replacements.

Employers are hoping to find "a way to shake up the health system to deliver better quality care at a better price for their employees," said Mercer's Watts. "That's a tall order, but it feels like we're at a little bit of inflection point."