Companies shifting more health costs to employees

December 1, 2008
Employers, now doubly pinched by steadily rising health insurance premiums and a steadily deteriorating economy, are searching for new and larger cost-shifting tools, according to survey and anecdotal evidence from Mercer, a global benefits brokerage and consulting firm.

For their 2009 health plans, nine out of 10 Hoosier employers said they planned to shift more costs to their employees in some way, Mercer found.

New York-based Mercer surveyed 67 companies in Indiana, 43 of which had 500 or more employees. The results from the survey are not scientific but do provide a broader-than-usual glimpse at trends in health benefits around the state.

Already, the median deductible amount at Indiana employers is $1,000 per individual. It's at the same level nationally now, after spiking up from an average of $500 in 2007.

"Raising the deductible has become the fallback for employers faced with cost increases they can't handle. It's the easiest way to reduce cost without taking more out of every employee's paycheck," said Bob Boyer, Mercer's Indianapolis market business leader.

Among Indiana companies, 33 percent plan to raise deductibles, co-pays, co-insurance or out-of-pocket maximums next year.

But other options are popular, too. Another 45 percent of Indiana employers plan to increase employees' share of premium contributions. And 12 percent will increase employee cost-sharing some other way.

Those changes, employers told Mercer, helped keep their yearly increase in premiums to 5.7 percent in 2009. They would have risen 8.8 percent, employers said, if they had made no changes from their 2008 benefits.

With the economy worsening since the survey was conducted in late summer, Boyer said he's helping employers figure out other ways to save money.

One example is that more employers are conducting eligibility audits of the dependents of employees who are covered by their health plan. For example, an employee's child who is no longer a student sometimes remains on the plan, using health benefits.

"It's amazing what you find," Boyer said. "What you find is a certain percentage of your population is abusing it."
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