Employers Seek the Best Healthcare Benefits, Prefer HMOs and PPOs

December 04, 2019 - As more employers seek to offer the best healthcare benefits to their employees, they are focusing on quality and a diverse set of plans, which tends to lead them toward HMOs and PPOs according to a survey by Transamerica Center for Health Studies.

"Employers are focused on the bottom line and believe healthcare benefits are important to attract and retain skilled workers, which in turn can yield better productivity and results," said Hector De La Torre, executive director of Transamerica Center for Health Studies.  "In fact, employers are remaining consistent in their health plan offerings which lessens disruption for their administration and for their employees."

Employers rightly focus on health benefits because 50 percent of Americans say they make employment decisions based on healthcare coverage.

This latest US Healthcare Employer Survey, which has been released annually since 2013, assesses the state of healthcare benefits in employer-sponsored health insurance.

In September, 1,379 employer decision-makers completed the 20-minute online survey. The data was weighted by company size, with categories ranging from small (1 to 49 employees) to medium (50 to 499 employees) to large (500 employees or more).

READ MORE: Large Employers Focused on Quality and Variety for Open Enrollment

The questions on healthcare benefits indicated some significant changes.

More Employers are Offering Healthcare Benefits

Over the course of the past several years, the number of employers who offered no healthcare benefits to any employees has been decreasing. In 2013, 21 percent of employers offered no healthcare benefits. The industry has been on a bumpy but definite downward slope to land where it is today—14 percent of employers do not offer healthcare benefits.

Employers are far more likely to give part-time employees healthcare benefits now than they were seven years ago, with a quarter of all employers offering healthcare to part-time employees. Meanwhile, 86 percent of full-time employees receive healthcare benefits, as opposed to 78 percent in 2013.

The employers who are most likely to provide healthcare benefits are large and mid-sized companies. All large companies offered healthcare benefits as did 98 percent of mid-sized companies.

In contrast, 65 percent of small businesses offered healthcare benefits to full-time employees and 34 percent did not offer any healthcare benefits at all. This is consistent with past statistics. In 2018, 90 percent of large and mid-sized employers were offering medical benefits, while only 55 percent of employers with 100 employees or less offered medical benefits.

Employers Prize Quality and Diversity In Health Plans

READ MORE: About 90% of Large, Mid-Size Employers Offer Medical Benefits

Employers have to prioritize and, when it comes to healthcare benefits packages, they chose to put quality first in 2019. Seventeen percent of employers prioritized giving employees the best healthcare benefits package that they could offer.

Not far behind, 13 percent of employers saw the provider network size as their top healthcare benefit-related priority and almost an equal amount (12 percent) emphasized providing healthcare coverage to all employees, full- and part-time alike.

Employers have already been diversifying the benefits in their packages, but now they are also looking to diversify the number of plans they use as well.

In order to offer the best healthcare benefits package they can, employers tend to provide three to five health plans. While that trend has remained constant for the past seven years, this year it was more accurate than ever before, with 45 percent of health plans offering three to five plans. This was most true for mid-sized and large companies, over half of which offered three to five health plans.

The larger the employer, the more varied their health plan options. Two out of every five large employers offered at least five different health plan options. More than a third of mid-sized employers offered four options.

HMOs and PPOs Are Most Popular Health Plans

READ MORE: 71% of Workers Satisfied with Employer-Sponsored Health Plans

However, there was one consistency across the employer size groups: at least half of all small, medium, and large employers offered health maintenance organizations (HMOs) and preferred provider organizations (PPOs).

Fifty-nine percent of employers offered and an equal number offered HMOs and PPOs. Under 45 percent provided alternatives such as health savings accounts (HSA), flexible spending accounts (FSAs), high deductible health plans (HDHPs), and health reimbursement arrangements (HRAs). Seventeen percent said that they offered fee-for-service (FFS).

No matter how many other plans the companies also implemented, however, HMOs and PPOs were always the most frequently offered.

Employers Are Not Changing Their Healthcare Plans

Apart from similar tastes in health plans, employers also shared an aversion to changing their health plans. Over the past year, only 24 percent of employers made alterations to their existing healthcare benefits. While this does not vastly differ from previous years, it is part of a slight decline in healthcare benefit changes over the past three years.

Of that 24 percent, nearly four in ten reported that the change was adding employer sponsored health plans.

The survey covered a wide variety of topics including affordability, health and wellness programs, and the rift between employer and employee perspectives.

The study emphasized that employers tend to be confident in the current trajectory, both with the support they provide and the health plans they offer. They are optimistic that they will make positive changes to their healthcare benefits packages in the coming couple of years.