|
|||
|
|
|
||||||
|
Getting a Handle on Health
As if we needed yet another sign that healthcare costs are rising, a new survey by Mercer finds that the median deductible required by employers for individual coverage in PPO health plans doubled, from $500 last year to $1,000 in 2008. Back in 2000, the New York-based consultancy found that the median deductible was just $250 and imposed by half of the employers surveyed. In this year's survey -- in which 2,900 employers participated -- a deductible is imposed by about four of five companies. "What's happening is the strategy that most employers are taking is to essentially increase the out-of-pocket amount that an individual will experience when they use healthcare services as opposed to making substantial increases in the payroll-deduction amount," says Blaine Bos, a worldwide partner at Mercer. The survey also found that, among employers with 500 or more workers, consumer-directed health plan offerings rose from 14 percent in 2007 to 20 percent in 2008. Only 5 percent of companies offered CDHPs in 2005. Employee enrollment in CDHPs is now 7 percent, up from 5 percent in last year's survey, but the majority of companies are not forcing their workers into these plans. Instead, says Robert Petcove, president of Advanced Benefit Advisors in Cherry Hill, N.J., companies try to lure employees to enroll in such plans by offering incentives such as reduced monthly contributions or additional funds for HSAs. Even so, consumer-driven health plans are becoming more acceptable to both employers and employees, says Bos, noting that it's only been a few years since health-reimbursement accounts and health-savings accounts became available. Compared to HMOs, which were introduced nationally in the 1980s -- something Bos called the last "truly new platform" -- HRAs and HSAs are gaining much more traction in less time. "It's becoming more acceptable to employees because they're already experiencing higher deductibles in their PPO plans," says Bos, "and it's more embraced by employers because there is a feeling that this is an opportunity to save money and strategically position the need for the employee or consumer to pay more attention to what things cost, to where they get services and the quality of the services they're getting." The economic downturn has also contributed to the increase in CHDP offerings, says Petcove, who estimates that CDHP offerings usually increase by just two or three percent each year. "Healthcare, for many of our clients, is the second or third largest budget item next to salary and raw materials," says Petcove. "I think people are using healthcare and consumer-driven health plans or high-deductible health plans to offset the fixed costs of doing business today." CDHPs have proven to be less expensive than HMOs or PPOs. In 2008, the average CDHP cost was $6,207, compared to $7,768 for HMOs and $7,815 for PPOs. Overall, the total health plan cost per family rose 6.3 percent in 2008, about the same increase the survey has reported each year since 2005. Employers said they expect a 6.4 percent increase for 2009. But will those predictions -- made in August and September -- hold up given the recent economic downturn? "That's the $64,000 question," says Bos, who warns that the last time the country saw a recession -- the 22-month period between 2001 and 2003 -- there was a spike in healthcare costs due to people electing to have discretionary medical procedures around the same time period. After all, people didn't know if their jobs were secure and, in turn, [they] elected to have procedures done while they still had employer-sponsored healthcare. "There's a concern that, as we enter this recession and as layoffs occur," says Bos, "we're going to have a lot of this discretionary stuff done." Petcove says companies should beware of low cost increases in an election year -- especially one in which there is much talk of nationalizing healthcare. "I think that any time there is an election year and health benefits are on the table, the suggested trend for the following year is artificially low," says Petcove. "After the election's done and people take office, I think that simmers back down and [prices go] back up to normal trends."
December 10, 2008 Copyright 2008© LRP Publications |
||||||
Print
Email
Write to the Editor
Reprints
|
||||
|
||||
|
||||
|
© Copyright 2010 LRP Publications. All rights reserved.
|
||||