The growing popularity of consumer-driven health plans is influencing the size of deductibles in traditional preferred provider organization plans, a study concludes.
Meanwhile, the overall rate of increase in the cost of group health care plan costs showed little change from the past few years, according to the “National Survey of Employer-Sponsored Health Plans,” conducted annually by New York-based Mercer.
In 2008, plan costs increased by 6.3 percent to an average of $8,492 per employee, up from $7,983 last year, according to the survey. This marks the fourth consecutive year that health care plan costs have increased by just over 6 percent. Costs increased 6.1 percent in 2005, 2006 and 2007.
With regard to deductibles, in 2008 the median PPO deductible—reflecting both single and family coverage—grew to $1,000 in 2008 from $500 a year ago, Mercer found.
The surge is notable because as recently as 2000, only about half of employers imposed a deductible for PPO coverage at all, and when they did, the median amount was just $250, according to Mercer, a unit of Marsh & McLennan Cos. Inc.
Blaine Bos, worldwide partner at Mercer in Minneapolis, said the growing prevalence of CDHPs—which combine a high-deductible health plan with some type of health savings account—was making it easier for employers to increase PPO deductibles without significant employee backlash.
PPO deductibles remain lower at large employers, however, with a median deductible of $300 for individual coverage and $800 for family coverage, according to the survey of nearly 2,900 employers that was released Wednesday, November 19.
Among plan types, the rate of cost increase was lowest for consumer-driven health plans, which increased by 4 percent to an average of $6,207 in 2008 compared with 2007, when CDHP costs averaged $5,970.
However, large employers saw a spike in CDHP costs, which grew by 8.2 percent in 2008 to $6,389 from $5,903 in 2007.
Bos said large employers are paying more in CDHP costs because more are funding HSAs this year to make the CDHP option more attractive to employees. In 2008, 71 percent of employers made contributions to HSAs, compared with 65 percent in 2007, he said. The average HSA contribution for large employers was $694 in 2008, Mercer found.
HMOs were the most expensive option offered by large employers, costing an average of $8,106 per employee in 2008, up 8.3 percent from 2007. HMO costs at employers of all sizes grew by an average of 9.1 percent, to $7,768, in 2008 compared with 2007.
PPO plan costs increased 5.8 percent at large employers to an average of $7,861 in 2008, compared with $7,429 in 2007. PPO costs at all employers grew 6.3 percent in 2008 to an average of $7,815 from $7,352 for PPOs in 2007.
(For more, read "Surveys Note Americans' Medical Debt Grows as Economy Worsens.")
Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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