Employers to See Reduced Health-care Costs Next Year, Survey Shows

 Print Article

RISMEDIA, Nov. 26, 2007-(MCT)-Health-care cost inflation will moderate for the average employer next year as companies shift more costs to workers and promote wellness, according to a survey released last week.

In its annual National Survey of Employer-Sponsored Health Plans, the Mercer consulting firm said employers will see health costs go up 5.7% in 2008, compared with 6.1% this year and the previous two years.

“There’s no question there will be more cost shifting (to employees),” said Jerry Nebbia, a principal in Mercer’s Kansas City office.

Companies shift health costs to employees through methods such as higher deductibles and other out-of-pocket costs. Mercer said that among large employers, average in-network PPO deductibles rose about 11% this year — from $426 to $473 for individuals and from $1,022 to $1,134 for families. The report notes that the rate of increase for employer-based health coverage will continue to outpace general inflation.

Health-benefit costs vary widely in the American workplace. The report said the average large employer nationally will see health costs go up 5.9% next year compared with 5.1% this year.

The report does not break out health-benefit costs for small employers. But Nebbia said small employers have been hit with large increases in past years and are expected to aggressively cut health costs next year.

Some small businesses simply drop coverage when they can’t keep up with the cost. Sixty-one percent of employers with fewer than 200 workers offered health coverage this year, down from 69% in 2001, the report said.

The report said a growing number of employers are using consumer-driven health plans — such as high-deductible plans tied to health savings accounts _ to control costs. Five percent of U.S. employees with health coverage were enrolled in such plans this year, up from 3% in 2006, Mercer said. Such plans will very likely be offered by 18% of employers with 500 or more workers in 2008, compared with 14% this year.

Health savings accounts aren’t for everyone. Workers who can’t or won’t fund the accounts will get little or no benefit from them.

But Nebbia said it surprises him that most employers still don’t offer a consumer-driven plan as an option, because they could save money if their workers enroll. “Complexity is an issue,” he said. “It’s challenging to explain to people how these work. Some employers have rolled them out without much communication, and they’ve been dismal failures, in terms of getting employees to sign up.”

The report also found:
–Eighty percent of large employers use wellness programs to control costs and improve worker productivity. Such programs typically include health screenings and education about healthy lifestyles.
–Five percent of large employers make employees who smoke pay higher health premiums. Such employers are more likely to learn about employee health habits through health risk assessments.
–Only 23% of employers said they supported “pay or play” laws that require employers to offer health coverage or pay into a fund to provide coverage for the uninsured. Among companies with 20,000 or more employees, only 13% support such a mandate.

The Mercer report is based on the responses of nearly 3,000 employers who were surveyed during late summer. The margin for error is plus or minus 3%.

Copyright © 2007, The Kansas City Star, Mo.
Distributed by McClatchy-Tribune Information Services.

RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.