Firms To Shift More Benefit Costs
Faced with health care benefit cost increases of 13.6 percent in 2002, more than half of employers say they will raise employee contributions by as much as or more than their expected cost increases, according to a survey released by Watson Wyatt.
In addition, over 70 percent of employers are considering benefit cuts or an increase in employee co-pays over the next 12 months, the study found.
"The economic downturn, softening labor market and accelerating health care costs are forcing employers to carefully review their current health care strategy. In some cases, that means shifting a greater portion of the cost to employees," said Maureen Cotter, global practice director for the Washington-based consulting firm that provides employee benefit services to risk managers.
Employers, she noted, are "recognizing the need to help employees become better consumers of health care, which will positively impact health care costs."
The survey, based on responses from 200 companies and covering 1.4 million employees, revealed that employers expect health plan costs for active employees to rise 13.6 percent next year, up from 12.2 percent this year and 8.1 percent in 2000.
The cost of prescription drug benefits are expected to rise about 17 percent. Of the four major types of health plans, employers are expecting indemnity plans to experience the highest increases at 14.4 percent.
Average expected premium cost increases from 2001 to 2002 for active employees include:
All plans–13.6 percent.
Indemnity–14.4 percent.
Preferred Provider Organization–13.7 percent.
Point-of-Service–12.7 percent.
Health Maintenance Organization–13.9 percent.
Prescription drug benefits–17 percent.
Medical-Only–13 percent.
Dental–6.7 percent.
Employers expect even higher cost trends for retiree medical plans. Cost increases for post-65 retirees are expected to accelerate from 13.3 percent this year to 15.1 percent in 2002, the study found. Much of that increase is attributed to an expected increase of 18 percent in the cost of prescription drug benefits for retirees.
For pre-65 retiree plans, employers predict an overall increase of 15 percent for 2002, with an average cost increase of 14.4 percent for medical and 18.4 percent for prescription drugs.
The survey also revealed a growing trend toward using the Internet to help employees become better-educated health care consumers. In fact, 75 percent of respondents said they are likely or somewhat likely to support employee education with Web-based medical information in the coming year.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, October 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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