Features, Health and Safety, New York

Managing healthcare costs for 2018

February 13, 2018

By David Stoddard, FSA, MAAA Consulting Actuary

As we begin a new year, multiemployer plans will need to renew their efforts for managing the benefits they offer members based on their healthcare budgets. In doing so, trustees and administrators will need to keep the following topics in mind when planning for 2018 and beyond.
Hospital costs

Hospital costs have increased for a variety of reasons over the last few years. We expect this trend to continue in 2018, due to hospital mergers and the increasing number of hospitals that are buying independent practices. Physicians who work with hospitals are able to charge a facility price at their offices. As a result, prices for the same service at two different sites can vary significantly, despite little to no correlation between price and quality, according to a NYS Health Foundation study. While this is a New York-specific study, it can generally be applied to most of the rest of the country as well. If your members are in an area with multiple facilities, consider providing educational tools or plan incentives in order to steer your members appropriately.

Prescription drug costs

Prescription drugs have been a hot issue over the past few years, and while the initial shock of specialty drugs has lessened, they continue to make up an increasing percentage of overall prescription drug costs. In addition, the national opioid crisis has focused significant attention on limiting unnecessary utilization through policies such as pharmacy “lock-ins” and quantity limits. In conjunction with managing the costs of these drugs, you will also want to think about reevaluating your current pharmacy benefit manager contract or increasing your purchasing power by joining a labor coalition as another potential savings.


While the most recent changes to the Patient Protection and Affordable Care Act (ACA) have had a more direct impact on the individual market—the individual mandate personal income tax penalty is reduced to $0 beginning in 2019—Congress is also continuing to consider ways to repeal the employer mandate, which would have a more direct impact on the group market. Additionally, multiemployer plans are still responsible for meeting their ACA-related reporting requirements.

Plan design

You may have your own goals or ideas for what you hope to accomplish, whether it is reducing the cost of a particular benefit or promoting a healthier lifestyle. Whatever the goal, you will want to ensure that the goals of the fund are aligned with the designs of the benefits.

The above issues are some of a variety of topics multiemployer plans may want to study in order to make prudent decisions. We plan to discuss each in more detail in future publications.

February 13, 2018

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