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Upstate health-benefit costs rose 3.5 percent in 2012

By Journal Staff


Health-benefit costs increased less in upstate New York than they did nationally in 2012, according to recently released results of a survey from the human-resources consulting firm Mercer.

Costs rose 3.5 percent in upstate New York to an average of $9,364 per employee, Mercer found in its National Survey of Employer-Sponsored Health Plans 2012, which it issued Nov. 14. Costs rose slightly more nationwide, climbing 4.1 percent to $10,558 per employee, although that was still the smallest increase measured by Mercer in 15 years.

Both the regional and national increases are lower than estimates from earlier this year. Preliminary polling showed health-benefit costs would rise nationally by 6.5 percent, Mercer reported in September.

Upstate’s health-care landscape helped hold down its cost increases in 2012, according to Thomas Flynn, a principal at Mercer’s Rochester office, which covers the upstate area.

“We’re at a little bit of an advantage,” Flynn says. “The cost of living and the overall costs have really started at a lower point.”

The region’s employers also boosted their consumer-directed health plan (CDHP) offerings, he adds. CDHPs are typically high-deductible health plans (HDHPs) paired with employee-directed spending accounts such as health-savings accounts or health-reimbursement arrangements.

CDHPs were offered by 44 percent of upstate employers in 2012, Mercer found. That’s twice the national CDHP offer rate and is up from 32 percent in 2011.

“Every year, we’ve said that upstate New York employers planned to look at these CDHPs at a much higher rate than anywhere else in the country — it was a running joke,” Flynn says. “This year, what we saw was the adoption rate of these CDHPs certainly accelerated.”

Upstate employee participation in CDHPs swelled to 16 percent this year, up from 13 percent last year. The national participation rate in the plans is also 16 percent.

Preferred-provider organizations (PPO) and point-of-service plans (POS) were still the most popular among upstate employees. PPO/POS plans covered 65 percent of workers in survey respondents’ health plans. HMOs covered 17 percent, and traditional indemnity plans covered 2 percent.


2013 costs

Survey respondents in upstate New York said they expect to limit cost increases in 2013 to 3.7 percent. In large part, that’s because they anticipate making changes to their plan designs or vendors.

More than half of upstate survey respondents, 54 percent, said they will shift costs to their employees. Examples of cost-shifting strategies include raising deductibles, boosting co-pays, raising out-of-pocket maximums, and increasing employees’ share of premium contributions. Without any plan changes, health-benefit costs would rise 6.7 percent next year, upstate companies predicted in the survey.

Large upstate employers, those with 500 or more workers, were not as optimistic about holding down health-benefit costs in 2013. They predicted that benefit costs would rise 5.9 percent if they did not make plan changes but believe they will hold costs to 4.2 percent by making modifications.

Many large employers seem to think they have exhausted their options for curtailing costs, Flynn says.

“What we’re seeing is they feel they’ve done so much already,” he says. “They’ve created incentives, they’ve attracted people to health management, they’ve attracted people to the HDHPs.”

Most survey respondents aren’t considering eliminating health-insurance coverage for their employees, Mercer found. Just 10 percent of upstate respondents said they are likely to terminate medical plans within the next five years, after state insurance exchanges are up and running. The portion is even lower among large upstate employers — 6 percent.

Mercer conducted its national survey in the late summer by polling public and private employers with at least 10 workers. This year, 2,809 employers completed the survey, which has a margin of error of plus or minus 3 percentage points.

In upstate New York, 54 employers completed the survey. A majority of those employers, 36, were large companies with at least 500 workers.

Mercer, which has 20,000 employees in more than 40 countries, is a wholly owned subsidiary of New York City–based Marsh & McLennan Cos., Inc (NYSE: MMC).


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