Employers Look To Raise Out-Of-Pocket Costs For Employee Health Plans, Rather Than Increase Premiums

Main Category: Health Insurance / Medical Insurance
Article Date: 10 Oct 2008 - 7:00 PDT

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With the open enrollment period for health insurance beginning and employee wages remaining static, many employers are hesitant to significantly increase health care premiums and instead are opting to increase the amount employees pay for out-of-pocket items such as deductibles and copayments, the Wall Street Journal reports.

According to a recent report by Hewitt Associates, out-of-pocket health care costs are expected to increase by 10.1% from 2008 to 2009 to an average of $1,880, compared with a 7.8% premium increase. Premium increases have grown by 10% or more in recent years, according to the Journal. A recent employer survey by the Kaiser Family Foundation and the Health Research and Educational Trust found that 41% of those offering health benefits said they were very or somewhat likely to increase workers' drug expenses in 2009.

The Hewitt report found that employees on average spend five to 15 minutes on open enrollment and about two-thirds choose to remain on their current plan. As a result, many employees may not notice these changes until later when they must pay their bill because they often are not as obvious as premium changes.

The Journal reports that some employers are raising fees more quickly than premiums because they believe it is more fair; larger fees and copays mean more out-of-pocket costs for employees who incur the largest expenses. In addition, some employers say implementing higher fees and copays makes employees more cognizant of the actual cost of medical care, according to the Journal.

Concerns regarding costs already have caused 17% of U.S. workers this past spring to either skip filling a prescription or go without doses, according to a forthcoming survey by Watson Wyatt Worldwide (Wilde Mathews, Wall Street Journal, 10/9).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation.  All rights reserved.

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