Aon Hewitt Survey Shows U.S. Employers Interested in Exploring Stricter Rules Around Health Benefits and Reference-Based Pricing as Part of their Health Strategy

Reduced Dependent Subsidies and Full-Replacement Consumer-Driven Health Plans also on the Rise

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Jun 11, 2014, 08:38 ET

LINCOLNSHIRE, Ill., June 11, 2014 /PRNewswire/ -- A new survey by Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON), shows that while employee cost shifting remains the most prevalent technique in employers' health strategies today, there is growing interest in adopting new health tactics to mitigate cost and improve population health in the future.

According to Aon Hewitt's soon-to-be-published Health Care Survey of more than 1,230 employers covering more than 10 million employees, 52 percent of employers said their current health strategy is focused on traditional trend mitigation approaches, such as employee cost shifting. However, just 21 percent said this would be their preferred approach in three-to-five years.

Instead, employers are considering new tactics that are more requiring of employees to take action.

In the next three-to-five years, more than 60 percent of employers plan to "gate" employees to richer designs, where employees are required to complete a "task" to access richer design options. About one in five employers gate their employees today.

"Gating strategies are becoming an increasingly attractive incentive technique among employers as they look to improve the health of their employee populations," said Jim Winkler, chief innovation officer of Health & Benefits at Aon Hewitt. "For example, employers may offer a basic high-deductible plan to their entire workforce, but make a richer PPO option available to those employees who complete a health risk questionnaire or biometric screening."

In addition, 68 percent of employers plan to adopt reference-based pricing—where employers set a pricing cap on benefits for certain medical services for which wide cost variation exists with no discernible differentiation in quality. Just 10 percent of employers have adopted reference-based pricing as a health tactic today.

"Despite the long-term promises of innovative strategies, employers are still gravitating towards existing cost control tactics because they can see immediate benefits," added Winkler. "However, these traditional cost-sharing approaches will not be as effective in the future, and employers will need to adopt multiple strategies to improve the foundation of how benefits are delivered, including funding, design, clinical and provider system changes."

Additional Plan Design Strategies
According to Aon Hewitt's survey, employers are also considering implementing the following tactics to mitigate health costs in the next three-to-five years:

72 percent of employers are or will be reducing subsidies for dependents
52 percent of employers anticipate using unitized pricing—where employees pay per person and not individual versus family—up from 5 percent today
42 percent of employers are considering offering high-deductible health plans as a full replacement plan, up from 15 percent today
24 percent of employers plan to offer employees tools to guide decisions in plan selection and utilization, up from 19 percent today
92 percent plan to offer cost transparency tools, up from 49 percent today

"The fundamentals of health care still matter, but employers are increasingly realizing that traditional approaches to mitigate health care cost trend need to be advanced," said Tim Nimmer, chief health actuary for Aon Hewitt. "Over time, plan design strategies will evolve to be more requiring of employees, and individuals will be held more accountable for their health and for using health care. At the same time, we see that employers are increasingly committed to providing employees with decision support tools that provide greater transparency around the cost and quality of care, so that individuals can make more informed health decisions for them and their families."

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About Aon Hewitt
Aon Hewitt empowers organizations and individuals to secure a better future through innovative talent, retirement and health solutions. We advise, design and execute a wide range of solutions that enable clients to cultivate talent to drive organizational and personal performance and growth, navigate retirement risk while providing new levels of financial security, and redefine health solutions for greater choice, affordability and wellness. Aon Hewitt is the global leader in human resource solutions, with over 30,000 professionals in 90 countries serving more than 20,000 clients worldwide. For more information on Aon Hewitt, please visit www.aonhewitt.com.

About Aon
Aon plc (NYSE:AON) is the leading global provider of risk management, insurance and reinsurance brokerage, and human resources solutions and outsourcing services. Through its more than 66,000 colleagues worldwide, Aon unites to empower results for clients in over 120 countries via innovative and effective risk and people solutions and through industry-leading global resources and technical expertise. Aon has been named repeatedly as the world's best broker, best insurance intermediary, reinsurance intermediary, captives manager and best employee benefits consulting firm by multiple industry sources. Visit www.aon.com for more information on Aon and www.aon.com/manchesterunited to learn about Aon's global partnership and shirt sponsorship with Manchester United.

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