Employer Health Plan Changes for 2011

The health “reform” law was largely sold on the promise of reducing costs, both the costs of health care coverage and the underlying costs of health services.  There was always good reason to be highly skeptical of this promise and a number of surveys of employers’ expectation for their health insurance costs suggest that the most likely effect of the legislation so far is an acceleration of costs.  The latest survey from the National Business Group on Health covers mostly large companies, which account for a substantial fraction of people with workplace health coverage.  It doesn’t have good news for the companies or their employees.  (NBGH Report)

This group of employers, who historically because of their size have experienced the lowest rates of health insurance cost growth, expects about a 7% rise for 2010, increasing to around 9% in 2011.  In response, they are using consumer directed health plans more frequently, believing that to be the most effective tactic to slow the rate of growth.  Sixty-one percent of these companies expect to offer such a plan in 2011, with 20% using it as full replacement for other forms of coverage.  These plans typically have very high individual and family deductibles and increasingly use coinsurance as well.  In addition, most of these employers intend to increase the employee share of the premium.  The sting is eased a little bit by the fact that a great majority of these firms make a substantial contribution to an HSA or HRA for the employees.

Wellness plans, coupled with incentives, are also very widespread among these companies, but believed to be less effective than benefit design to control costs.  Overall, the survey suggests that the private employment-based health insurance market is going to see double-digit increases for several years.  If these large companies have 9% growth rates, then medium and smaller firms are surely seeing much larger ones.   And employees increasingly bear the brunt of the pain; companies have decided to pass most of the increase on to them, both in larger premium share and through deductibles and coinsurance.  No relief should be expected until something is done to address the unit cost of services.