New York – Companies that offer employee health insurance expect another steep jump in medical costs next year, and more will ask workers to share a bigger chunk of the expense, according to a new PricewaterhouseCoopers report.
Subscribe to our Daily Roundup Email
For the first time, most of the American workforce is expected to have health insurance deductibles of $400 or more, the consulting firm said in a report.
Deductibles are the annual amount a patient pays out of pocket for care before insurance coverage starts. They are generally separate from co-payments and coinsurance.
Two years ago, only 25 percent of companies participating in the annual survey said they asked employees to pay deductibles of $400 or more. That grew to 43 percent in 2010 and is expected to pass 50 percent next year.
Employees who are asked to pay more through things like higher deductibles help keep cost growth in check because they use less health care.
The health care reform law passed by Congress and then signed by President Obama in March has just started to unfold and will have little impact on costs next year, said Michael Thompson, a principal with PricewaterhouseCoopers.
“In general, it’s a continuation of a fairly high rate of medical inflation,” he said.
PricewaterhouseCoopers found that medical costs are expected to rise 9 percent next year. But this doesn’t mean workers will see their monthly premiums jump by the same amount.
Employers typically try to soften the impact of a cost increase by absorbing some of it, changing insurance plan designs or asking employees to pay higher deductibles or a larger coinsurance percentage.
For instance, a medical cost increase of more than 9 percent was forecast for 2009. But the average annual premium rose only 5 percent for family coverage that year and stayed flat for single coverage, according to a separate study from the Kaiser Family Foundation.
The 9 percent medical cost increase projected in 2011 is actually slightly smaller than the 9.5 percent jump PricewaterhouseCoopers is seeing this year. Thompson said several top-selling drugs will lose patent protection next year and become exposed to lower-cost generic competition. That will help temper the increase.
The PricewaterhouseCoopers report also found a steep drop in the percentage of employers that subsidize retiree health coverage. It said only 22 percent of employers with more than 5,000 workers subsidized retiree coverage after age 65 this year. That’s down from 37 percent in 2009.
“It’s a major cost and one that employers have for years now been moving away from,” Thompson said.
PricewaterhouseCoopers compiled its report by analyzing e-mail survey results from 674 companies in 30 different industries across the country. Most of the companies participating had 1,000 employees or more. The firm also interviewed health plan executives and reviewed analyst reports.
A main reason for the cost increasing, is that family plans must cover ALL people ages 18-26 free of charge. When you add 8 years of coverage to people, of course the rates will go up. Somebody has to pay for it!
Eventually should these increases continue, businesses will just cover health insurance for the actual employee and maybe his spouse/significant other, and the children will be forced to be on government health care.
What hapened to the messiah and “obamacare” ??????? I thought he was solving all our prolems and costs were going down?. Oh I get it, Democratic math, to go down in price first it has to go up? This is mamash torahs the Old sage of chelm. People get in for a rough ride.
Thank you Obama, Pelosi, & Reid!!!!
So how is that hopey changey thing doing for yall??
We all know Obama and Pelosi were lying to us. What a bunch of low lives obama should be impeached.
Shocking!!
everything will likely cost more in 2011
How about co-pays? will that go up too????
We just got a letter from our group health insurer that our co-pay will be tripled for general care and 5X for specialist care.
All of you blaming Obama should maybe actually read the article. It said that this is part of regular medical cost inflation. This type of thing has been going on for decades, why weren’t you screaming then? It’s only bad if you blame Obama? It’s not bad if the insurance companies are scalping you for their own profits? Where’s your seichel? The insurance companies have been bleeding us dry forever, this article is about nothing new.
Are they waiting for all the middle class citizens to die because they have no money to pay their copays and insurance? Why do they have to suffer so much & pay for the poor because they’re stuck in middle of the sandwich????
You may be technically right all you Obama supporters, but the point here is that there’s no free lunch. So in the same way that deductibles will go up so businesses can avoid higher premiums, they will find other ways to squeeze employees if they are forced to cover more of them, and ins. companies will find ways to make a profit even if they need to cover more people and/or services, which will in effect mean higher costs for the rest of us. And let’s not even discuss taxes.
We don’t need to wait for Obamacare to fully take effect to know that it’ll be a disaster because the math is on our side.
Well, yeah, there is no such thing as a free lunch. But millions and millions and millions of people have had no lunch (i.e. coverage) at all. Had the Republicans won the election, what would they have done for *them* ? Answer: gornisht. Not much would have changed. Actually, had the Republicans had their way, this whole issue would not even be discussed.