Average Annual Deductible for Individual Employer-Sponsored PPO Now Over $1,000, According to Survey

The increasing cost of health care in the U.S. has prompted more U.S. employers to shift a larger portion of the expenses to their workers, pushing the average annual PPO deductible in 2008 for a single worker to more than $1,000, according to a study released on Wednesday by Mercer , the Los Angeles Times reports (Girion, Los Angeles Times, 11/20). The study was based on an annual survey of about 2,900 businesses nationwide that had at least 10 employees (Boulton, Milwaukee Journal Sentinel, 11/19).

The study found that the mean deductible for a traditional health plan increased from $859 last year to $1,001 this year, an increase of about 17%, because a large number of employers, especially those with fewer than 500 workers, raised their deductibles (Rubenstein, Wall Street Journal, 11/20). The study found that nearly half of all employers nationwide in 2000 offered health plans that did not require workers to pay a deductible, but in 2008, four in five businesses required a deductible, in addition to an average monthly premium of $124 for individuals under PPO plans (Raabe, Denver Post, 11/20). According to the Journal, from 2000 to 2007 the median deductible had stayed consistent at $500. Deductibles typically are raised in increments of $500, $1,000 or $1,500 (Wall Street Journal, 11/20).

The Denver Post reports that businesses have been able to maintain their annual cost increases at about 6% over the last four years by charging employees higher monthly premiums and deductibles. Health benefit costs for U.S. employees averaged $8,482 per employee, an increase of 6.3% on average, according to the Post (Denver Post, 11/20). Blaine Bos, the chief analyst for the survey, said, "Raising the deductible has become the fallback for employers faced with cost increases they can't handle," adding, "It's the easiest way to reduce cost without taking more out of every employee's paycheck" (Yee, Minneapolis Star Tribune, 11/19).

Laura Baker, a consultant for Mercer, said that companies are expecting further increases in 2009. "Historically, downturns in the economy have often correlated with higher medical trends," Baker said (Los Angeles Times, 11/20). However, Chris Watts, head of Mercer's health and benefits consulting office in Denver, said, "But these are different times, and history may not repeat itself," adding, "Higher employee cost-sharing -- like a $1,000 deductible -- could prevent that spike in utilization that we've seen in other recessions" (Denver Post, 11/20).

Small Businesses Experience Biggest Deductible Increases
A separate employer survey by the Kaiser Family Foundation and the Health Research and Education Trust found that businesses with three to 199 workers had experienced the largest increase in deductibles, with at least one in three workers paying a minimum of $1,000 for single PPO coverage (Los Angeles Times, 11/20). The study also projected potential increases in employee deductibles, copayments and other fees in 2009, the Raleigh News & Observer reports (Wolf, Raleigh News & Observer, 11/20).

Survey co-author Gary Claxton, a Kaiser Family Foundation vice president and director of the Foundation's Health Care Marketplace Project -- said deductibles likely would continue to increase over the next couple of years. "When unemployment goes up, workers just have less ability to push for good benefits," he said (Wall Street Journal, 11/20). He said that a deductible "discourages people from using services," adding, "The more cost-sharing there is, the more it's going to be discouraged. And when they are already worried economically, that's got to amplify the effect" (Los Angeles Times, 11/20).

The Mercer study is available online.