Report: Many Employers Preparing Alternate Health Coverage Offerings

Westlake Village, Calif. — June 18

Amid uncertainty surrounding the future of employer-sponsored health coverage, employers are preparing to pursue alternate methods of offering health care options to their employees, such as defined contributions, vouchers, exchange purchasing or cutting coverage altogether, according to the J.D. Power and Associates 2012 Employer Health Plan Study.

The study, now in its third year, measures six key factors that affect employer satisfaction with health insurance carriers: employee plan service experience; account servicing; program offerings; benefit design; problem resolution; and cost.

Health plans are ranked in two segments: fully insured plans (health plan assumes the risk of providing health coverage for insured events) and self-funded plans (employers bear the risk associated with offering health benefits).

The study found that 47 percent of employers say they “definitely will” or “probably will” switch to a defined contribution model within a private exchange, allowing employees to select the coverage that best fits their needs, while also potentially saving the employer costs.

In the J.D. Power and Associates 2012 Member Health Plan Study published earlier this year, 42 percent of respondents with employer-sponsored coverage expressed interest in the defined contribution model as well.

As other options become available, some employers may also consider eliminating coverage altogether. Despite uncertainty regarding future costs and methods of covering health care, only 13 percent of fully insured employers and 14 percent of self-funded employers say they “definitely will not” or “probably will not” continue to sponsor employee coverage at all.

Cost is still a primary concern for both employers and employees, and has a greater impact on choosing a health plan than on the actual service experience. The perceived reasons for high health care costs vary among employers and employees. Employers view fees charged by doctors and hospitals as the top reason for high health care costs, while employees most frequently view health insurance companies’ marketing or administrative costs as the primary reason for high costs.

Among fully insured plans, Kaiser ranks highest in employer satisfaction with a score of 716 (on a 1,000-point scale). Kaiser performs particularly well in account servicing, problem resolution, program offerings, cost and employee plan service experience.

Among self-funded plans, Aetna ranks highest in employer satisfaction, achieving a score of 680 and performs particularly well in account servicing.

The 2012 Employer Health Plan Study is based on responses from 6,579 employers, with quotas to assure an adequate distribution of small, medium and large companies. The study was fielded between April and May 2012.

Source: J.D. Power and Associates