Employer Health-Care Costs, Worker Deductibles Increase

[Neil D]

Health-care premiums paid by employers and their workers rose again in 2008, but more slowly than in recent years, as more employees grappled with deductibles of $1,000 and higher, a nationwide survey showed.

The average premium rose 5% in 2008, according to an annual survey of nearly 2,000 employers by the Kaiser Family Foundation and the Health Research and Educational Trust. The widely watched barometer of health-care costs does offer some faint consolation: The increase wasn't much changed from last year's and a far cry from the 13% to 14% increases five years ago.

Another large employer survey released Wednesday, by employee-benefits consultancy Towers Perrin, projected a 6% rise in premiums for 2009. That is in line with a survey by Hewitt Associates earlier this week, which predicted a 6.4% increase in companies' health-care costs next year.

Consumers are struggling with record health-care costs -- which have climbed at several times the rate of inflation or wage increases for the past decade -- just as they face a barrage of economic pressures, from declining retirement-savings accounts to higher energy and food prices. The annual cost of an average family health plan rose to $12,680 this year, more than double the $5,791 it cost in 1999, according to the Kaiser survey. Workers' annual contributions to those premiums have also doubled, to $3,354 in 2008 from $1,543 in 1999.

What's more, employees are taking on an increasingly greater share of health-care spending beyond premiums. The biggest shift in costs has come in the form of rising deductibles. About 18% of all workers with some kind of health coverage face deductibles of at least $1,000, up from 12% in 2007.

The survey's researchers say many high-deductible plans cover some preventive care or prescription drugs before the deductible is met. And about 8% of workers are enrolled in high-deductible plans with accompanying savings accounts that employers help fund or allow workers to save money for medical expenses tax-free.

But plenty of people simply have to pay those steep deductibles on their own. "The larger trend is toward less comprehensive, skimpier health plans and greater out-of-pocket costs for employees," said Drew Altman, president of the Kaiser Family Foundation, a nonprofit health-policy research group in Menlo Park, Calif.

The shift has been most dramatic at smaller firms, many of which have less power to temper premium increases beyond shifting more costs to employees. More than one-third of covered workers at smaller companies -- those with fewer than 200 employees -- must pay at least a $1,000 deductible before their plan will cover a share for many services. That amount is up from 21% last year.

Health-care costs have risen so steeply for Northridge Holdings Ltd, a real-estate management company in Addison, Ill., that it switches insurers every two to three years to get the best price. To save on premiums for its 18 employees this year, Northridge jumped to a plan with a $2,600 deductible for single employees and $5,200 for families, with some preventive care paid up front and a $1,500 health-reimbursement account that workers could use toward the deductible.

Despite the hassle, the company is planning next year to switch to another, more traditional plan with a rival insurer offering a price break. It faced a 26% increase if it had stayed. "We have no control" over these costs, said Northridge President Glenn Mueller.

Larger companies have more resources at their disposal to control costs. Towers Perrin, which surveyed 321 employers with 6.6 million workers, said those that actively manage health-care spending, such as encouraging more generic or mail-order drugs and the use of health-savings or reimbursement accounts, will on average have $1,464 fewer costs per employee than more-passive companies. Their employees, on average, also will pay $350 less in premiums, the report said.

[carolaa]

Healthcare is a huge problem everywhere. I haven't heard any solutions I like yet. But only the elitists can say it is not a huge problem.

[Dr. Shane]

Yes, it is a major problem. I have the solution but no one is asking so I don't expect it to get solved any time soon.

[Neil D]

Yes, it is a major problem. I have the solution but no one is asking so I don't expect it to get solved any time soon.

[to myself] I know I am going to regret this....[to Shane] so-

what is your solution to the health care problem?