Workers to pay bigger share of medical costs

Most employers plan to trim their health care costs next year by tapping a familiar source of help: their workers.

Preliminary findings of an employer survey by consulting firm Mercer Inc., released this week, show that 59 percent of U.S. employers will reduce their health cost increases in 2009 by raising workers’ deductibles, co-pays, and percentages of a medical bill that workers pay.

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The same is true for most Georgia and Southern companies, said Tony Holmes, an Atlanta-based health care consultant for Mercer.

Even with shifting costs to workers, U.S. employers still project an overall 5.7 percent increase in health benefits cost next year, according to the Mercer survey of 1,317 employers.

That increase is lower than those of the previous 10 years, but still higher than the general rate of inflation. Small businesses will face 10 percent increases.

The annual growth in benefit costs stems, in part, from higher prices of medical services, such as hospital and physician care, and of prescription drugs. And more medical services are being used per person, said Mercer’s Holmes.

Many employers, though, have more moderate benefit increases than previous years, in part because they’re focusing on health care as a mounting threat to profitability. “CEOs have put the cost of health care as one of their top business priorities,” Holmes said. Businesses are increasingly promoting wellness programs and installing high-deductible health plans, which lower their costs.

The full Mercer survey is expected to be released this fall.

While many workers face growing out-of-pocket costs, they often see their health care premiums rise as well. Georgia’s health plan that covers state employees and schoolteachers, for example, is increasing their 2009 premiums by an average of 7.5 percent. The State Health Benefit Plan covers 690,000 state employees, schoolteachers, dependents and retirees.

Large employers, with more negotiating clout, can use their numbers to get more manageable insurance deals, but small businesses have a tougher time finding affordable coverage.

Health costs remain the No. 1 concern for small businesses both in Georgia and nationally, said David Raynor, state director of the National Federation of Independent Business. He said 52 percent of Georgia NFIB members in a 2007 survey said they were not offering health insurance to workers because of a lack of affordability — up from 36 percent in a similar survey in 2005.

A local NFIB member, Pat Kaemmerling of Access Computers, said health premiums jumped 40 percent for her Norcross company in its new benefit year, which began this month. The hike was bigger than usual, she said, because one employee had a serious illness, while another worker’s spouse fights a chronic medical condition.

“Any time you have an illness in a small group, you’re really penalized,” she said. “These people can’t go out and get an individual policy. The insurance companies know that. …

“Of course, our profits aren’t going up 40 percent.”

Workers’ premiums are rising either by $45 or $123 per month for individual coverage, depending on which plan they choose.

Kaemmerling said if the price of health insurance continues to soar, she would consider a high-deductible plan, which has lower premiums.

A new Georgia law seeks to expand the use of high-deductible, savings account health plans.

Overall, large employers get a huge advantage on affording health insurance, Kaemmerling said.

If her company had just a 5.7 percent increase, “I would have danced in the street.”