Employers Take a Dim View of the Health-Care System

Employers view the health-care system as wasteful and expensive. They see the keys to improving the system to be in pricing and performance transparency, according to a survey by Deloitte. Also, three years into the implementation of the Affordable Care Act (ACA), many companies do not fully understand the law’s features.

Researchers surveyed 500 randomly selected U.S. employers offering health benefits during May and June of 2013 with 50 or more workers. Only 33% give the system an A or B grade while 38% give it a C, and 29% give it D or F. Only 22% say the ACA will reduce costs by 2019, and 19% say it will improve quality of care by that time. About half of respondents say it will widen access to health insurance.

When asked what is likely to improve the system, the leading response was increased price transparency around of specific medical products, services, and procedures (52%) followed by clear, accessible information about the performance of care provided by doctors (46%).

Bill Copeland of Deloitte said employers are frustrated over a lack of value compared to what they pay into the system, and they don’t think that the ACA is addressing this gap. He said, “Employers feel they lack the data and tools to manage their concerns around cost and quality. I think in the coming year, they will join the front lines of the effort to improve the system by demanding more visibility and by strengthening the use of incentives and penalties to motivate employees toward healthful behaviors.”

Employers expect to shift 26% of cost increases to their workers. In fact, the top costs-containment strategies are having employee cost-sharing (54%), having wellness programs (36%), changing plan designs (28%), reducing benefits (20%), managing networks (19%), limiting worker hours (18%), and using defined contribution plans (17%).

Rick Wald of Deloitte said that employers “are dissatisfied with the health system and feel a need to take more action. On the other side they are watching to see if the health-reform measures gain traction. One way or another, corporate America is likely to make significant moves around health care because the status quo isn’t sustainable.”

The survey also reveals the following:
* Employers expect their health costs to be 19% higher in 2014.
* 49% share cost and quality information with employees about health-care providers, common procedures, and medications.
* 26% invest in rewards/penalties, technologies, and coaching to motivate employees toward healthful behaviors, and 39% measure their return on investment.
* Employers lack trusted sources to help them make value-based purchasing decisions. Those identified as the most trusted resources include independent consultants (24%); physicians (22%); and health insurance plans and third-party benefits managers (each 21%).
* 23% analyze their claims data to identify providers that do unnecessary testing or procedures or to see if providers are complying with evidence-based standards. Slightly more than one third use claims data to analyze employee use and costs regarding treatments, medications and other services.
* Employers point to hospital costs (75%), prescription drug costs (67%) and waste and inefficiency in clinical/administrative/billing processes (67%) as the chief drivers of health costs. Such factors as insufficient competition in insurance market, insufficient employee awareness and responsibility for costs and new technologies and equipment rated lower.
For more information, visit www.deloitte.com/us/healthsciences.

Last Updated 08/10/2022

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