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Rising Healthcare Cost to Employers Passed on to Employees

A recent survey by the National Business Group on Health shows that large employers expect their healthcare expenses to increase significantly next year. It also shows that they plan to diffuse the cost increase by extending it to their employees.

Large employers are projecting a healthcare cost hike of 8.9 percent in 2011, a significant leap from the previously projected 7 percent increase for 2010. Healthcare reform was partly, although not entirely, credited with the increase.

The new regulation, which takes effect September 23rd, will affect costs in accordance with each company’s current healthcare practices. About 70 percent of the companies currently have “lifetime cap” or total dollar limits that they will have to eliminate. Around 25 percent will have to end annual limits on benefits. And 13 percent will now have to extend coverage to children suffering from expensive preexisting medical conditions to whom they had previously denied coverage. Many employers reported that they intend to cover these increases by requiring greater employee contribution.

Although the changes might be seen in different places, most employees will be affected by them. 63 percent of employers indicated that they planned to increase employee contribution to premiums. 46 percent of employers intend to increase employee out-of-pocket contributions.

Some companies also report that they plan to reduce costs through other means. Company-directed wellness programs have become more popular. Also on the rise are consumer-directed health plans, which allow employees more say in how they spend their healthcare dollars.

Employers and consultants are hinting –if not warning- that employees should be prepared to pay more for their health insurance in coming years. In fact, employers indicate that they intend to encourage employees to restrict healthcare spending in order to slow these rising costs.

If this is true for big businesses, are small businesses or the self-employed doing any better? As it turns out, no. No one, it seems, is able to dodge the rising healthcare costs. New legislation has raised costs to insurance companies who are ready and willing to pass those costs onto consumers via huge increases (sometimes 50%!) in premiums. Although some states are fighting back, the federal government and most states are helpless to perturb premium increases. Look for a future post about the changing healthcare costs that are being felt by those employed at small companies and the self-employed. Until then, look here for further reading.

The National Business Group on Health represents large employers’ health policy interests. The NBGH surveyed 72 companies, each with over 5,000 employees. These companies provide their own health insurance and hire a health insurer to administer the coverage.


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3 Responses to “Rising Healthcare Cost to Employers Passed on to Employees”

  1. Sue Gagliardi Says:

    I cannot believe health insurance premiums continue to rise as they have been. We have individual (i.e. family) coverage, and the rates for our family of 5 have increased over 30% in each of the last 3 years. And I am not counting a change in our age group. That will be coming next year as my husband turns 40. This rate of cost increases cannot continue. What’s going to happen to people who make less than we do? (And are typically younger, and who typically make less money.) They will start to drop off of the lists of those who are insured. And the cycle continues. Does the recent health care reform change any of this? For us it’s only a matter of time before I either have to drop off the roles of the insured, or change my lifestyle completely by selling my house, or worse. Maybe we’ll have to move to Europe, where coverage is mandatory.

  2. Carrol Manke Says:

    What a post!! Very informative and easy to understand. Looking for more such posts!! Do you have a facebook?
    I recommended it on stumbleupon. The only thing that it’s missing is a bit of color. However thank you for this blog.

  3. Tiffani Floth Says:

    Good infomation here, thanks.

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