The 2015 plan sponsor survey is our eleventh annual survey of 100 plan sponsors with 500 or more members. Larger plan sponsors are important because, although they represent only 0.9% of all plan sponsors, they control the benefits of 47% of all plan members1. As well, they tend to have a more thorough understanding of benefits, trends and options. This year’s survey suggests that plan sponsors recognize more than ever the importance of wellness as a means to control health-related costs. Plan sponsors are, however, also expecting to make changes that directly impact the benefit spend. The survey followed the format of previous years. It contacted 100 senior benefits and HR managers who agreed to complete a detailed questionnaire, either online or by telephone. The survey was conducted by Research House on behalf of TELUS Health Analytics.
We attempted to recruit a sample that reflected as closely as possible the distribution by size, region and public/private characteristics in Canada. Figure 1 shows the distribution of the sample by size, province and sector. Compared to previous years, the sample more closely reflects the geographic and public/private distribution of plan sponsors.
After reaching a peak last year in terms of share of plans using formularies, plans of all sizes seem to have backed off from this cost management strategy (Figure 2).
Are sponsors cutting back on other benefits?
If economic conditions influence drug plan design decisions, other benefits do not seem to be at risk. Figure 3 shows the share of plan sponsors offering four of the most common benefit programs. There has been a small change in each of these percentages2, but the ranking and actual share of sponsors offering the benefit are virtually unchanged from last year.
How are plan sponsors tackling wellness?
Last year, TELUS Health introduced a series of questions designed to obtain a deeper understanding of the programs, benefits and strategies sponsors use to get results from their wellness spending. Figure 4 shows the share of sponsors who indicated they had in place the different programs mentioned. The results this year are very similar to last year, with two notable differences:
- A doubling of the share of sponsors with programs for blood testing for diabetes, cholesterol and other conditions, and
- Close to 85% of sponsors now have disability management programs in place. As active management usually results in early return to work, this is part of the wellness spending that has a direct and measurable outcome for sponsors.
Are we moving away from cost and towards health management?
In 2015, we continue to see more sponsors focusing on health management in making their drug plan decisions. While Figure 5 shows that most sponsors are inclined to balance cost and health management, the share that has shifted away from a purely cost-based approach has declined significantly, with the “Health Management” focussed group increasing its share from about 22% in 2013 to about 38% of sponsors in 2015.
Influencers of benefit design
Figures 6 shows respondents’ comments about factors that influence benefit design, particularly drug plans and also shows that for the entire sample, respondents agree that productivity, industry practices and corporate compensation strategy all influence plan design.
Retaining and attracting employees
Respondents view the importance of benefits in retaining versus attracting employees differently. (Figures 7 and 8). In both cases, the majority of respondents agree that benefits are very or extremely important. However, respondents feel that they have more impact on initial attraction of the employees than they do on retention. The two findings are not necessarily in conflict – it could be that respondents feel that if the sponsor has a good plan that was influential in attracting a new recruit, it will probably also keep the recruit satisfied once in the job.
Cost increases still holding (for now)
Figure 9 shows that most plans kept cost increases under 5%. Fifty-four percent of all respondents reported cost increases under this threshold in 2015, compared to only 43% and 40% in 2014 and 2013 respectively. The only group that saw a smaller share of sponsors was the >5,000 employee category, and in that group the share dropped from 60% to 39%. Furthermore, the large plan sponsors also had the largest share of plans (17%) with cost increases of more than 10%. (About 5% of the entire sample had cost increases in excess of 10%).
What do sponsors do about cost increases?
In almost two-thirds of cases, plan sponsors have absorbed the increase and not changed the plan or the carrier. (Figure 10) Those who did respond, took a variety of measures with no particular action more dominant than any other.
What is driving cost increases?
Respondents have not singled out any particular factor as a contributor to cost increases, but seem to acknowledge that it is a multi-factorial issue. (Figure 11) Pharmacist fees and direct-to-consumer advertising are somewhat less of an issue than in the past. Except possibly for “stress”, the only driver that plan sponsors have any ability to control is “more high-cost drugs”. This is one of the highest-rated drivers on all our surveys over the years, which likely means a continuing focus by payers on limiting access to high cost medicines as a way to manage rising drug costs.
Plan changes under consideration
In terms of administrative arrangements, the most likely change to plans over the next three years is for more plans to implement employee wellness programs. (Figure 12) Although mentioned only half as often, the next most likely changes are switching to a pay-direct card and adding flex benefits when it comes to the overall design of the benefit plan, respondents use a wide range of internal and external resources (Figure 13), including consultations or negotiations with employees.
Unlike recent surveys, the 2015 survey suggests that plans may be at a tipping point. On one hand, most are still benefiting from the low cost increases of the past. However, there is a small group for whom costs are rising beyond the 5% and even 10% level. These sponsors are more likely to act on cost management measures, according to our results. The plan sponsors who are experiencing the higher increases may be the ones who were early adopters of mandatory generics or other cost- cutting approaches. If so, they are left to find new ways to act in the face of rising costs. This, plus expected difficult economic conditions in 2016, could be a signal that plan sponsor focus on the bottom line may be the most important determinant of what happens to drug coverage and plan member cost sharing this year.
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