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Employers Expect 9 Percent Rise in Health Plan Costs

August 19, 2010
Related Topics: Financial Impact, Benefit Design and Communication, Health and Wellness, Latest News
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Large employers estimate that the cost of their group health care plans will rise nearly 9 percent in 2011, according to a survey released Wednesday, August 18.

The National Business Group on Health survey of employers concludes that 2011 health plan costs will increase an average of 8.9 percent, up from the 7 percent increase they expect this year.

One factor driving the rise is the federal law that will require the overwhelming majority of U.S. employers to expand their health care coverage, requirements that begin as soon as next year.

The NBGH survey of 72 member employers found that 70 percent will have to amend their plans to eliminate lifetime limits, 26 percent will have to remove annual dollar limits and 13 percent will have to remove pre-existing condition exclusions for children under age 19 to comply with the law.

NBGH president Helen Darling estimates that one percentage point of that 8.9 percent increase projected for 2011 is due to changes required by the law. Cost increases also are being fueled by unabated rate increases by medical providers, Darling said.

In many cases, employers will shift more costs to employees. For example, 63 percent of respondents said they will boost the percentage of the plan premium paid by employees next year, up from 57 percent this year.

In addition, 46 percent of employers say they will boost out-of-pocket maximums in 2011, up from 36 percent in 2010. Twenty-one percent say they will raise 2011 co-payments or co-insurance for specialist care.

“With cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do ever year,” Darling said in a statement.

In addition, the survey found that 20 percent of employers will offer only a consumer-directed health care plan next year, up from 10 percent this year.

A summary of the report is available at www.businessgrouphealth.org.   

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

 

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