Employers anticipate the cost of health-insurance coverage will rise slightly faster in 2013 than it has in recent years, according to early results from an upcoming survey.
The average per-employee cost of health coverage will rise by about 6.5 percent in 2012, preliminary responses to an annual health-benefits survey show. The human-resources firm Mercer is conducting the survey and released its advance results on Sept. 11.
Health-insurance benefit costs posted an actual increase of 6.1 percent in 2011, Mercer found. Last year, its polling predicted a 5.7-percent increase for 2012.
The 2013 anticipated increase reflects responses submitted by about 2,000 employers nationally through Sept. 4. They are likely close to cost increases that will be felt in upstate New York, according to Thomas Flynn, a principal at Mercer’s Rochester office, which covers the Upstate region.
“I think when you look at percentages, we’re probably pretty close,” he says. “The average increase is similar, but we’ve got a lower starting point in most cases. Those premiums that you’re going to see [when the national survey is released] are much higher than we pay in upstate New York.”
Employers said health-benefit costs would increase by about 8 percent if they made no changes to their current plans. That’s slightly lower than the cost trend in recent Mercer surveys, which averaged 9 percent.
Health-benefit costs won’t be jumping by 8 percent in part because many employers are shifting costs to employees. More than half of employers, 58 percent, said they planned to hold down their own cost increases by shifting costs to employees.
“I think over the last couple of years people have tried to keep that as steady as possible just because of the state of the economy,” Flynn says. “Now people are saying, ‘I have to focus on the budget this year, and I’m going to have to take one of two actions to manage my costs.’ One is to pass them along to employees.”
The other strategy employers are using to blunt spiking health-insurance premiums is moving workers to high-deductible health plans (HDHP), Flynn says. Those plans, which carry deductibles in the thousands of dollars, are typically paired with health-savings accounts or other medical-spending accounts controlled by an employee.
“These are things people have been saying they’re going to do and haven’t done for the last four years,” Flynn says. “This year people actually pulled the trigger because it fits nicely with a longer-term health-reform strategy.”
Setting up HDHPs as a base plan allows employers to offer their workers health insurance that will meet affordability requirements under the federal health-care reform law, according to Flynn. And many employers use some of the cost savings from HDHPs to make contributions to employees’ medical-spending accounts. Employees who directly control part of their medical spending could have an incentive to manage their health better, he adds.
But it’s important that employees in HDHPs know that preventive care like a physical is covered in full even before they reach their deductible, Flynn says.
“You go to any [company] and you’ll have a few employees who think, ‘I’m not going to get a physical done, I’m fine and I don’t need to pay $150,’ ” he says.
Early survey results also found that few employers are ready to stop offering health plans after the federal reform law is fully in place. Just 6 percent of large employers with 500 or more employees said they would terminate coverage, and 16 percent of small employers with 10 to 499 employees said they would do so.
Mercer’s full survey will likely come out within a few weeks of Thanksgiving, Flynn says. It will include responses from 2,700 employers and will break data down by region of the country.
Mercer has 20,000 employees in over 40 countries. It is a wholly owned subsidiary of New York City–based Marsh & McLennan Cos. (NYSE: MMC).
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