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Employers pay about 20% of all health care expenses in the United States, and as of 2015, employer health care expenditures were $638 Billion.(1 ) Most of those expenditures are for insurance premiums and the care provided under self-funded plans. In 2016, employer sponsored insurance premiums were, on average, $6,435 for the individual employee and $18,142 for a family, an increase of 3% over 2015.(2) Employers paid, on average, 82% of individual premiums and 71% of family premiums, while 83% of employers with 200 or more employees fully or partially self-funded their health care benefits program.(2)
With employers bearing such significant financial responsibility for insurance premiums and overall employee health care costs, they have much to gain by health care cost savings initiatives. One notable shift driven by employers has been the significant growth in high deductible consumer-driven insurance plans combined with health savings accounts. In 2006, these plans made up just 4% of employer health insurance coverage, but their popularity has grown substantially to 20% on plans in 2014, 24% of plans in 2015, and 29% of plans in 2016. These consumer-driven type plans, in 2016, cost on average $5,762 for an individual and $16,737 for a family in 2016, a savings of 15% and 12% in comparison to PPO individual and family plans.(2) These premiums do not include the employer contributions to employees’ health savings accounts, but the savings in premiums can be used to fund these accounts. The result for employees, is that they have lower premiums with a higher deductible, but some of the deductible is offset by the health savings account contribution. For individuals and families who are low utilizers of heath care services, the high deductible plans with health savings accounts may result in accumulation of health care funds that could be used in future years when expenses might be higher. Those who are high utilizers of health care, however, often find that these plans result in higher out of pocket health care costs for them.
Employers and employees have a shared interest in reducing health care costs and optimizing overall health and wellness, and among the ways employers are leading this effort is by offering health and wellness services. It remains questionable as to the extent that generalized wellness programs provide health care savings, but programs focused on managing chronic disease and reducing unnecessary utilization among the highest health care utilizers have been shown to save money for employers and employees. This is not surprising since 50% of people are responsible for only 2.8% of health care costs, while over 50% of health care expenditures are consumed by just 5% of the population. The top 1% of utilizers consume 22.8% of the health care costs.(3) A ten year study of seven Fortune 100 employers demonstrated that while general lifestyle management programs cost more than the direct health cost reduction that resulted, the disease management programs brought savings with an impressive ROI of 3.8.(4) There are likely additional less quantifiable benefits for an employer offering lifestyle management programs (including gym memberships and dietary coaching for all) such as enhanced employee perceptions of the employer and greater loyalty, but for the most immediate health care cost savings, investing in programs that specifically help employees with chronic diseases better manage their conditions will bring the greatest savings for employers and employees alike.
