Workers’ Premiums for Employer-Sponsored Health Coverage Increasing an Average of 14% Next Year, Survey Finds

The Washington Post on Oct. 21 reported that employees of large businesses will pay an average of 14% more for employer-sponsored health benefits next year, according to a Watson Wyatt Worldwide survey of 200 large companies released last week. The expected increase is almost four times the rate of inflation. Last year, health costs to employees rose 8% and this year, they increased 12%. The Post reports that many workers will be subjected to higher copayments for prescriptions and higher deductibles for hospital and doctor visits. With such "steep" price increases, many businesses may reduce or drop their health benefits. While large companies typically pay 80% or more of an employee's health insurance, low profit margins are forcing executives to "scale back" on benefits or pass the costs to employees. Meanwhile, insurers say that the aging U.S. population, advances in medical technology, and the increased clout exercised by hospitals in negotiating reimbursement rates have pushed up insurance costs. Also, costs are increasing as consumers "turn away" from HMOs in favor of less restrictive PPOs. Ed O'Neil, senior vice president and chief actuary of CareFirst Blue Cross Blue Shield of Maryland, said, "[Patients] want to make those decisions rather than having a physician sign off every time they want to see a specialist. That costs more. But people feel in more control of their own medical well-being when they're able to do that" (Brubaker, Washington Post, 10/21).