by worldatwork.org

Sept. 8, 2008 — The bad news you’ll have to pass on to your employees is that their health benefits premiums will increase again in 2009. The good news you can tell them is that the projected 5.7% increase will be the lowest increase in more than a decade, according to survey findings from Mercer.

The 5.7% increase comes after double-digit increases between 2000 and 2005, and then a smaller increase of about 6% in 2005 where growth rates have hovered since.

The more than 1,300 employer health plan sponsors (less than half of those actually surveyed) that responded to Mercer’s survey indicated that the total cost to renew their current health plans (without making changes) would increase about 8%, according to Mercer. Small employers (10-499 employees), though, may see a higher increase of about 10%, the company said. Most respondents said they planned to take action to lower their actual cost increases.

“It’s a relief to see cost growth trending down, even slightly,” Blaine Bos, a senior Mercer health and benefits consultant based in Minneapolis, said in a Mercer story. “But this is not an unqualified success story. While some employers are holding down cost growth with innovative methods of improving health-care quality and efficiency, more typically employers struggling with increases they can’t handle resort to the tried and true method of shifting cost to employees.”

In fact, the Mercer survey revealed that more than half — 59% — of the employers that said they were going to take action to reduce the 2009 increase planned to raise deductibles, copayments, coinsurance or employee out-of-pocket spending limits.

Significantly fewer — 19% — told Mercer they plan to lower their 2009 costs by adding a consumer-directed health plan (CDHP). A CDHP offers a high deductible and an employee-controlled spending account. The intention of this type of plan is to give employees more ownership of the costs involved in their health-care decisions. The plans allow employees to save account dollars they don’t spend for future needs, according to Mercer. The Mercer survey showed that cost increase for respondents that offer a CDHP was lower than those that don’t offer a CDHP — 4.5%.

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