I frequently come across interesting information that, while not lending itself to a full blog post, is still worth sharing. This post is part of a periodic series in which I summarize this information and provide links for those who want to learn more.
• Employers are developing and implementing a long-term strategy to deal with the so-called Cadillac tax on health benefits, according to a survey
conducted by the Midwest Business Group on Health (MBGH) and The Benfield Group. The main finding: “After 2013, the majority of employers responded that they will be adjusting to the ‘new normal,’ making changes to their benefit design strategy in response to the post-ACA environment,” says MBGH president Larry Boress. “The majority plan to continue to offer benefits.” One of the key issues employers face even now is how to deal with the so-called Cadillac tax on higher cost health benefit plans. Starting in 2018, employers will be assessed a 40% excise tax on plans that cost more than $10,200 for single coverage or $27,500 for family coverage. Back in 2010, Towers Watson estimated that 60% of larger employers would be affected by the tax based on then-current plan costs and expected cost increases for those plans. However, the MBGH survey indicates that employers are starting to manage their plans to deal with the Cadillac tax now even though it does not go into effect for several years. Nearly one-third (31%) of the 111 employers nationwide indicate they plan to reduce their benefits in the 2014-2016 timeframe to avoid the tax when it comes and 41% say they will reduce benefits in 2017-2018. • This interesting Wired article
by former Intel CEO Andy Grove discusses the lack of transparency in health care pricing. Grove likens today’s health care pricing to the opaque prices of automobiles in the 1950s before auto dealers were required to have detailed pricing information, including the manufacturer’s suggested retail price, on the window of each vehicle. As a result of this lack of transparency, health care costs vary widely for reasons that are not readily apparent. Not surprisingly, Grove thinks technology and changing patient and industry mindsets can do a great deal to empower patients and make health care pricing more competitive. • Do your employees understand exactly what they are buying when they choose a health plan, particularly one that comes with a lower premium in exchange for potentially higher out-of-pocket costs? Citing data from a 2009 study of actual out-of-pocket costs for ten health plans, the Robert Wood Johnson Foundation
issued recommendations on how to help individuals choose a health plan based on a clear understanding of their potential costs under each plan. While high deductible health plans look appealing at enrollment because of their generally lower premiums, those plans by definition require individuals to pay more when they use the plan. The study cited by the foundation found that breast cancer patients paid anywhere from $2,004 out of pocket when covered by a low-deductible to $55,250 when covered by a plan available only to young adults; heart disease patients could pay from $1,881 to $39,355 and diabetes patient from $507 to $4,126.