Employees Paying More For Health Insurance, Trend Continues
According to a recent survey from Mercer, employee health insurance and care costs rose 6.8% in 2008, and the trend is likely to continue. The average deductible for health care insurance in the United States was $1000 per individual, a $500 increase. The National Survey of Employer-Sponsored Health Plan, performed each year by Mercer, showed that in 2000, most employer health care plans carried no deductible. Those who did only required $250 out of pocket, on average.
The higher deductible applies to traditional PPO plans, which cover approximately 69% of employees. Health Savings accounts, available to employees pre-tax, "may have changed employers' thinking on just how high a deductible can go without causing employees to revolt," says worldwide Mercer partner Blaine Bos. Employers have a hard time keeping up with the cost of insuring their employees, and raising the deductible for PPO plans allows employees to keep the same take home pay.
Economic recessions, and fears of job loss often spurn increased health care spending. Employees, fearful of becoming uninsured historically rush to obtain routine health screenings and other medical care when fearful of job loss. Stress contributes to the problem as existing medical and mental health issues exacerbate. More people enroll in Medicaid. Blaine Bos speculates that high deductibles might discourage many from using their insurance at all, ultimately increasing the rate of uncompensated utilization of the health care system. According to Bos, times are different, and …"history might not repeat itself. Higher employee cost-sharing – like a $1,000 deductible – could prevent that spike in utilization that we've seen in other recessions."
A solution from large employers includes utilization of a combination of consumer directed health care plans (CDHP'S), that provide either health care reimbursement, or an option for putting money into a Health Savings Account (HSA). Small businesses have not seemed to follow that trend. According to Bos, "Difficult economic times may speed both the adoption of CDHPs by employers and higher enrollment rates where employees have a choice of plans," With so many employers already requiring relatively high deductibles, it's not a big step for them to put in an HSA with a $1,150 deductible – the minimum amount for 2009 – and use the savings to fund the account, improving overall value to employees." Employees with few medical problems could actually come out financially ahead, making it a health care option that employees might find attractive.
Health care might also be in a fix if retirees are asked to their jobs leave early, also an economic impact that needs to be considered, according to Mercer.
Regardless of which plan health care consumers are driven toward, the message is clear - healthcare coverage is a priority. Most employers are of the opinion that if you can afford a health care plan, you need to buy it.
Health care reform is the subject of much debate. There is no doubt that we all need to think through our options, and make a plan to protect our most valuable asset – good health. Expecting to pay more for health care in 2009 is certainly not welcome news. Consumer spending is likely to have a significant economic impact on employers and employees alike in 2009.