Towers Watson’s OneExchange for Active Employees Holds Health Care Cost Increases for Employers to Just 1.8% in 2015
09 October 2014 - 12:05AM
Business Wire
Total 2014 savings expected to exceed $1,400 per active
employee, with $500 passing through to the employee
Towers Watson (NYSE, NASDAQ: TW) announced today that total
spending on health care by employers participating in Towers
Watson’s OneExchange private exchange solution for active employees
is projected to grow by just 1.8% from 2014 to 2015. Total spending
includes funding for coverage from employers as well as employee
contributions and out-of-pocket costs.
The 1.8% growth rate is very close to the Consumer Price Index
(CPI), which was 1.5% in 2013, and is much lower than both
historical and projected market averages for health benefit cost
increases. Achieving growth levels at or near the CPI is necessary
if employers are to avoid the Patient Protection and Affordable
Care Act’s excise tax on high-value health plans, known as the
“Cadillac tax,” which goes into effect in 2018.
For comparison purposes, midsize to large employers not using a
private exchange expect a 4% increase in 2015 health care costs for
active employees after some plan design changes. If no plan changes
are made, employers project a 5.2% growth rate.1 Aon Hewitt
recently announced a projected cost increase for employers using
its private exchange of 5.3% for 2015.2
“These results validate OneExchange as a new opportunity for
employers to aggressively manage medical spending without
sacrificing important programs that contribute to a healthier
workforce, such as wellness and intensive chronic disease
management,” said Dave Osterndorf, a managing director with Towers
Watson’s Exchange Solutions. “The plans and programs built into
OneExchange are based on best practices proven to bend the cost
curve in a dramatic way. The financial and administrative
efficiencies of OneExchange offer all employers a ready-made
solution that achieves results that mirror those of the country’s
leading self-insured employers.”
Health Care Spending Cost Increases Compared to CPI
Increase Time Period CPI
1.5% 2013 (most recent) OneExchange for active employees† 1.8% 2015
over 2014 Midsize/large employers, with plan changes‡ 4.0% 2015
over 2014 Midsize/large employers, with no plan changes‡ 5.2% 2015
over 2014 Aon Hewitt Active Health Exchange‡ 5.3% 2015 over 2014
† Based on three 2014 employers‡ Based on projections for 2014
and 2015 spendingSource data: Cost-related data gathered by
consultants on behalf of 492 Towers Watson clients.
2014 Savings Will Exceed Initial Projections
In addition to projections of low cost increases for 2015,
employers using OneExchange are on track to exceed initial
estimates of cost savings for 2014. Compared to what employers
would have experienced outside OneExchange, average cost savings
were expected to exceed $900 per employee. Based on 2014
year-to-date savings, the average is now expected to exceed $1,400
per employee.
“With OneExchange, employees and their families are spending
less when they need health care, and are needing less care as they
take more control of their health and health care decisions,” said
Jean Moore, a managing director with Towers Watson’s Exchange
Solutions. “Equally important, the cost savings employers are
achieving with OneExchange are not coming from a cost shift to
employees or from employees ‘buying down’ by choosing less valuable
plans and running the risk of underinsuring. Instead, they are
coming from implementing a comprehensive health coverage strategy
with highly effective plans and programs.”
Savings Shared by Employees
While OneExchange cost savings improve employers’ bottom lines,
they also increase employees’ pay packages. On average, employers
expect about $500 of the $1,400 per-employee savings in 2014 to
pass through to employees. The cost savings come to employees in
the form of reduced payroll contributions toward health care
coverage and/or lower out-of-pocket costs.
Added Moore, “It’s not often you can give your employees a raise
and save money for your company at the same time. OneExchange does
that.”
About Towers Watson
Towers Watson (NYSE, NASDAQ: TW) is a leading global
professional services company that helps organizations improve
performance through effective people, risk and financial
management. The company offers consulting, technology and solutions
in the areas of benefits, talent management, rewards, and risk and
capital management. Towers Watson has more than 14,000 associates
around the world and is located on the web at towerswatson.com.
1 Towers Watson 2014 Health Care Changes Ahead Survey, July
20142 Aon Hewitt press release, September 18, 2014
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20141008005112/en/
Towers WatsonRob Wyse, +1
212-920-1470rob@capital-content.comorMelanie Meharchand, +1
650-292-8717melanie.meharchand@towerswatson.com
Trustwave Holdings (MM) (NASDAQ:TWAV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Trustwave Holdings (MM) (NASDAQ:TWAV)
Historical Stock Chart
From Jul 2023 to Jul 2024