Companies have hit the wall in terms of how they're going to provide health benefits to employees, thanks to the largest two-year increase in costs since 1990, a new survey finds.

According to a poll by Mercer Human Resource Consulting, employers nationwide expect health care costs to rise 14.6 percent in 2003, a little less than 2002's 14.7 percent. The two-year increases are about 7 times the rate of overall inflation.

The pain is being felt nationwide.

"Our members are tearing their hair out; they're really pretty desperate," Chris Biddle, spokesman for the New Jersey Business and Industry Association, tells the Star-Ledger of Newark.

Sally Welborn, Wells Fargo's vice president of corporate benefits, tells the Los Angeles Times that "Certainly, the company cannot withstand increases of this magnitude in the future."

The Mercer survey says that companies' health costs increased from an average of $3,594 per employee in 1997 to $5,646 per worker this year, a 56-percent increase.

The reasons are varied, say experts, and include managed care backlash, hospital charges, and the costs of new technology and medicines.

The increases seem to be affecting small- and medium-sized businesses the most.

"Some small companies are seeing 20- to 40-percent increases in their health benefits costs," Tom Bryon, president of SS&G and Associates, an employee benefits consultant, tells the Kansas City Star. "In lieu of absorbing the 40 percent, they're slashing benefits, passing on premium costs to employees, or eliminating coverage entirely."

Peter Boland, PhD, a health care consultant, says that any other time costs have risen this steeply, there has always been some sort of intervention. Don't count on it this time.

"Now, managed care is dead as a cost-containment vehicle," he predicts.

Bryon makes an even bolder pronouncement. "We're on a fast train to national health care," he says.

Managed Care’s Top Ten Articles of 2016

There’s a lot more going on in health care than mergers (Aetna-Humana, Anthem-Cigna) creating huge players. Hundreds of insurers operate in 50 different states. Self-insured employers, ACA public exchanges, Medicare Advantage, and Medicaid managed care plans crowd an increasingly complex market.

Major health care players are determined to make health information exchanges (HIEs) work. The push toward value-based payment alone almost guarantees that HIEs will be tweaked, poked, prodded, and overhauled until they deliver on their promise. The goal: straight talk from and among tech systems.

They bring a different mindset. They’re willing to work in teams and focus on the sort of evidence-based medicine that can guide health care’s transformation into a system based on value. One question: How well will this new generation of data-driven MDs deal with patients?

The surge of new MS treatments have been for the relapsing-remitting form of the disease. There’s hope for sufferers of a different form of MS. By homing in on CD20-positive B cells, ocrelizumab is able to knock them out and other aberrant B cells circulating in the bloodstream.

A flood of tests have insurers ramping up prior authorization and utilization review. Information overload is a problem. As doctors struggle to keep up, health plans need to get ahead of the development of the technology in order to successfully manage genetic testing appropriately.

Having the data is one thing. Knowing how to use it is another. Applying its computational power to the data, a company called RowdMap puts providers into high-, medium-, and low-value buckets compared with peers in their markets, using specific benchmarks to show why outliers differ from the norm.
Competition among manufacturers, industry consolidation, and capitalization on me-too drugs are cranking up generic and branded drug prices. This increase has compelled PBMs, health plan sponsors, and retail pharmacies to find novel ways to turn a profit, often at the expense of the consumer.
The development of recombinant DNA and other technologies has added a new dimension to care. These medications have revolutionized the treatment of rheumatoid arthritis and many of the other 80 or so autoimmune diseases. But they can be budget busters and have a tricky side effect profile.

Shelley Slade
Vogel, Slade & Goldstein

Hub programs have emerged as a profitable new line of business in the sales and distribution side of the pharmaceutical industry that has got more than its fair share of wheeling and dealing. But they spell trouble if they spark collusion, threaten patients, or waste federal dollars.

More companies are self-insuring—and it’s not just large employers that are striking out on their own. The percentage of employers who fully self-insure increased by 44% in 1999 to 63% in 2015. Self-insurance may give employers more control over benefit packages, and stop-loss protects them against uncapped liability.