Employers Expect Health Care Cost Increases To Hold Steady At 6% This Year, According To Survey

Main Category: Health Insurance / Medical Insurance
Article Date: 23 Feb 2009 - 1:00 PDT

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U.S. employers expect increases in health care costs to remain at 6%, twice the rate of inflation, and more will offer consumer-directed health plans in 2010 in an effort to control costs, according to a Watson Wyatt and National Business Group on Health survey released Thursday, Reuters reports. Ted Nussbaum, a group and health care practice expert at Watson Wyatt, said, "Cost increases have stabilized, but the financial crisis is causing many companies to re-evaluate their health plan strategies."

The survey of 489 large U.S employers found that the average employer spent $7,173 per employee for health care and paid 20% on average of total premium costs for workers in 2008. Eighty-six percent of employers surveyed said they do not plan to cancel or delay health insurance programs. The survey also found that 30% of employers had changed health care strategies in 2008, and an additional 30% said they plan to do so this year. According to the survey, 51% of the companies currently offer workers consumer-directed health plans, an increase from 47% in 2008.

Helen Darling, president of the Business Group, said, "Given the current economic crisis, high costs are clearly top of the mind for workers and their employers," She added, "By promoting health habits for workers, companies can mitigate cost pressures and build a healthier, more productive work force."

Losing Insurance
In a separate report released Thursday, the Center for American Progress projected that 14,000 U.S. residents were losing employer-sponsored health coverage each day because of layoffs. This projection was based on a Kaiser Family Foundation analysis prepared by researchers at the Urban Institute that showed that a one percentage point increase in the national unemployment rate results in 2.4 million people losing employer-sponsored coverage. Of those people, one million seek coverage through Medicaid or CHIP, while 1.1 million remain uninsured (Fox, Reuters, 2/19).

The Center for American Progress report can be found online (pdf.).

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© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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