It looks like employers’ health care costs will increase by somewhere in the mid-to-high single digits next year. According to one survey, costs for employer-sponsored health insurance will average over $9300 per worker next year. That’s just 7% more than this year, which is ‘good news’. Another report indicates costs will jump by 8.7% to $8600+ per worker. (the disparity appears to be due to differences among survey methodology and subjects, the Towers study focuses on larger employers while the Hewitt data is from health plans).
If the good news continues, health care costs will be $18,600 per employee in ten years.
I was somewhat surprised to learn that premium increases were fairly consistent across all sizes of employers – typically smaller employers see their costs increase more rapidly than their larger brethren. Perhaps it is due to ‘positive selection’, a term I just made up.
This is the opposite of adverse selection – smaller employers with costs that are rapidly trending up may be dropping coverage as it becomes unaffordable. And that may be happening.
A Kaiser Family Foundation study indicates the number of small employers (3-9 employees) offering health insurance has declined from 56% in 1999 to 45% in 2007. Among employers with 3-199 employees, the ‘offer rate’ dropped from 68% in 2000 to 59% today.
The overall decline in employer-sponsored health insurance is driven almost entirely by smaller employers.
Another potential contributor to positive selection is individual employees declining to enroll in their employer’s health plans. From California HealthLine –
Dave Gillette, managing director of the Towers Perrin Health and Welfare practice, said, “Increasing employee contributions, deductibles, copays and premiums are causing many workers to opt out of their employers’ health plans, forcing significant numbers of employees to join the ranks of the working uninsured.”
My guess, and it is just a guess, is those workers dropping insurance are more likely to be in the lower income strata, which tend to be less healthy and therefore may incur higher health care costs.
What does this mean for you?
Employers’ health care premiums are increasing much faster than the overall rate of inflation – but they would be going up even faster if so many folks weren’t losing their coverage.
This is yet another indicator that cost has to be addressed in any serious reform effort.
It is funny that when reporting their quarterly status, we do not see many insurance companies not showing mega profits.
When our government begins to look at our healthcare situation it needs to begin by looking at that.
Both surveys quote percent increases after the employers have made plan changes (raised deductibles, raised copays, etc). If plan design remained the same, trend would be 2-3% higher. The latest surveys are putting a positive spin on the numbers to 1) reduce momentum for healthcare reform and 2) attract business from companies whose increases are above average.
(Also, the guy at TP is Dave Guilmette – not Gillette).
Hi CJB…I totally agree with you!
I agree with the comment that ‘spin’ placed on these survey results is being used to divert the move to serious healthcare reform. Focusing only on employer-sponsored health coverage ignores the detrimental lack of uniform (federal)rules and regulations across all forms and sources of health insurance. In the individual market (in Washington, DC at least), premiums have recently increased 20% while coverage remains limited. Any meaningful healthcare reform needs to address both cost/expense and uniform rules for all forms of insurance.
For downloadabale questionnaires you might want to check out the Survey Questionniare Archive at: http://www.cadsr.udel.edu/sqa
The Survey Questionnaire Archive is an open collection of survey questionnaires used in social sciences and public policy making.
The archive is created, hosted and maintained by the Center for Applied Demography & Survey Research at the University of Delaware.
This digital collection allows users to browse, search, store and share survey instruments over the web.
The goal of the archive is to collect, capture, disseminate and preserve a wide variety of survey instruments.