NEW YORK--(BUSINESS WIRE)--According to the National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer and released today, many employers feared that health benefit cost growth would spike in 2009 as employees, worried about keeping their jobs and health coverage, consumed more health services than usual. In fact 2009 saw the lowest annual increase in a decade, as the average per-employee cost of health benefits rose 5.5 percent to reach $8,945 after four years of increases of just over 6 percent. However, benefit cost growth outpaced inflation in 2009 by a widening margin.

Similar cost growth is expected in 2010; employers predicted that medical plan cost would rise by about 9 percent in 2010 if they simply renewed their current plans without making any changes. However, they hope to achieve about a 6 percent increase after making changes to plan design or changing plan vendors.

Mercer’s survey included public and private organizations with 10 or more employees and 2,914 employers responded in 2009.

“Small and large employers used different strategies to keep cost growth down in 2009,” said Beth Umland, Mercer’s director of health and benefits research. “Small employers moved employees into low-cost consumer-directed health plans and raised PPO deductibles. What jumped out among large employers was an increase in programs and policies designed to improve workforce health.”

Sharp increase in adoption of health management programs

The ongoing workforce health management/wellness movement gained momentum in 2009, as virtually every type of program – from health risk assessments to disease management to behavior modification – rose significantly. While not conclusive, survey results suggest these programs are impactful: medical plan cost increases in 2009 were about two percentage points lower, on average, among employers with extensive health management programs. And nearly three-fourths of employers that measured the return on investment say they are satisfied with the savings, lower utilization rates or improved health risks. However, only about a third of all large employers measure ROI.

“A lot more employers were willing to bet on health management in 2009,” said Linda Havlin, a worldwide partner and Mercer’s global health and benefits intellectual capital leader. “There’s growing anecdotal evidence that well-designed and communicated health management programs can improve outcomes, but we need to better understand and eliminate missed opportunities like noncompliant patient behavior.”

Currently, a fifth of all large employers – but almost half of those with 20,000 or more employees – use health management incentives. Very large employers are also increasingly willing to reward employees who demonstrate responsibility for their own health. Nearly a fourth of those with 20,000 or more employees vary employees’ premium contribution amounts based on their smoker status – 23 percent, up from 17 percent last year.

CDHPs catch on big with small employers

Small employers held down cost increases by sharply raising deductibles for in-network PPO services. Their actions drove the average PPO deductible among all employers up by about $100 for an individual and $300 for families, to $1,096 and $2,515, respectively. Consistent with past years, employers kept premium contributions relatively stable.

Compared to large employers, small employers have been slow to adopt high-deductible, account-based consumer-directed health plans. But in 2009 CDHP offerings among employers with 10-499 employees jumped from 9 percent to 15 percent. This helped drive the percentage of all covered employees enrolled in CDHPs from 7 percent to 9 percent. Enrollment in PPOs was flat at 69 percent, while enrollment in HMOs fell from 23 percent to 21 percent.

While growth in CDHP offerings in 2009 was evident only among small employers, the plans are still more common among larger employers: CDHPs are offered by 20 percent of employers with 500 or more employees, and 43 percent of those with 20,000 or more employees. However, small employers that offer a CDHP are much more likely to offer it as the only medical plan: 55 percent compared to just 9 percent of large employers with CDHPs.

A challenge for health reform: Predicting how employers that don’t offer coverage will react

National health reform may include a provision that would require employers to offer a plan or pay a penalty, and which course of action they would choose has important consequences for the future of the US health care system. In interviews with more than 500 employers that don’t offer coverage, more than two-fifths (44 percent) said they would be more likely to offer a plan to their employees if all individuals were required to obtain coverage – a provision that is also in House and Senate proposals – and 57 percent would be more likely to offer a health plan if they received an annual tax credit that would reduce the net cost of the health coverage to about $2,000 per employee.

On the other hand, less than a fourth (22 percent) say they would support a requirement to pay 4 percent of their payroll into a public or private fund to provide coverage to their employees.

Survey methodology

The Mercer National Survey of Employer-Sponsored Health Plans is conducted using a national probability sample of public and private employers with at least 10 employees. More than 2,900 employers completed the survey in 2009. The survey was conducted during the late summer, when most employers have a good fix on their costs for the current year. Results represent about 600,000 employers and more than 90 million full- and part-time employees. The error range is +/–3 percent.

The full report on the Mercer survey, including a separate appendix of tables of responses broken out by employer size, region and industry, will be published in late March 2010. For more information on purchasing the survey, visit www.Mercer.com/ushealthplansurvey.

Notes for editors

A full copy of this press release, including additional findings and a glossary of key terms, can be found at http://www.mercer.com.

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to solve their most complex benefit and human capital issues, designing and helping manage health, retirement and other benefits. It is a leader in benefit outsourcing. Mercer’s investment services include investment consulting and multi-manager investment management. Mercer’s 18,000 employees are based in more than 40 countries. The company is a wholly owned subsidiary of Marsh & McLennan Companies, Inc., which lists its stock (ticker symbol: MMC) on the New York, Chicago and London stock exchanges. For more information, visit www.mercer.com.

Mercer
Stephanie L. Poe, 202-331-5210
stephanie.poe@mercer.com