Health cost inflation, CDHP growth & a reverse view on retirement: 3 things you need to know this week

We scan the news so you don’t have to! Here’s what we think are this week’s three must-reads from the world of benefits:

Health cost trend dips even lower: 4 key influencers

New analysis from PricewaterhouseCoopers reveals that “defying historical patterns,” medical inflation will drop in 2014—even lower than this year’s levels. Already great news, but even better, PwC gives a big share of the credit to “aggressive and creative steps by employers.” In its 2013 Touchstone Survey of more than 1,000 employers across 35 industries, the firm attributes the trend decline to four key factors:

1. Consumers seeking lower-cost care from retail clinics and mobile health outlets, rather than more expensive hospitals and traditional physician’s offices.

2. Major employers—specifically citing Walmart, Boeing, and Lowe’s—are moving toward direct contracts with “high performance networks,” even ones far from headquarters, believing that they will yield greater cost savings.

3. The federal government’s new readmission penalties are whacking away at health care waste. According to the PwC report, hospital readmissions dropped by nearly 70,000 in 2012, a trend expected to pick up steam next year.

4. 17% of employers say they offer a high-deductible health plan as the sole benefit option for employees, and 44% are considering it for the future.

Of course, another big factor is that the recession, along with the slow economic recovery, has caused consumers to rein in health care spending—but such actions have been compounded by employees’ increased exposure to consumer-driven plan designs.

Lastly—and this should make your day—PwC puts health care organizations on firm notice that you and your employees are going to make their lives very uncomfortable in the future: “Employer engagement and individual consumers are a powerful and growing force in the health ecosystem. To succeed, health care organizations should fashion strategies around new demands for value.”

CDHP growth is exploding

Lending even greater credibility to PwC’s findings referenced above, census data analyzed by the American Association of Preferred Provider Organizations reveals that an estimated 39 million Americans were enrolled in CDHPs in 2012, up from 33 million the previous year (a 19% jump!).

Breaking down the numbers further, large employers were unsurprisingly the most likely to offer a CDHP—36% of those with 500 or more workers and 59% of those with 20,000+ employees have one, AAPPO finds.

HSAs are most common, again unsurprisingly, offered by 27% of large employers. Yet, employee enrollment is higher in HRA models—40%, compared to 27% for HSA plans.

This week’s hidden gem: Don’t retire! It’s bad for your health!

A recent Bloomberg commentary by Peter Orszag had a sensationalist title (“Retirement Will Kill You”) but a solid message with research to back it up. Orszag’s overall message: Retirement leads to poor health.

To substantiate his point, he references conclusions from Harvard researcher Jennifer Montez and Anna Zajacova from the University of Wyoming. The women jointly examined why women’s life expectancy varied so widely along education levels, specifically white women age 45 to 84. Montez and Zajacova found employment rates were a common thread, in that less-educated women who worked less lived shorter lives.

Even when factoring in whether poorer health was contributing to lower employment rates, the researchers still concluded that “diverging mortality across education levels is at least partly due to the health benefits derived from employment.”

Orszag also notes the Institute of Economic Affairs in the U.K. also have identified “negative and substantial effects on health from retirement,” including increased incidence of depression and a drop in how well retirees assessed their own health status—effects that intensified the longer people were retired.