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Survey Finds Employers Bracing for Jump in Health Plan Costs

Source: Business Insurance

Posted on 19 Aug 2010

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A survey conducted by the National Business Group on Health (NBGH) finds that employers are forecasting an average 8.9% spike in health care insurance plans for 2011, up from the 7% jump in costs they are expecting for 2010.

The new federal law that will require the overwhelming majority of U.S. employers to expand their health care coverage -- beginning as soon as next year -- is seen as a major driver of the increase.

The survey, which polled 72 of NBGH's member employers, said that in order to comply with the new laws, an overwhelming 70% of respondents will have to change their plans to eliminate lifetime limits; 26% will have to remove annual dollar limits; and 13% will have to remove preexisting condition exclusions for children unger age 19.

NBGH President Helen Darling estimates that one percentage point of that 8.9% increase projected for 2011 is due to changes required by the law. Cost increases also are being fueled by unabated rate hikes by medical providers, Darling said.

In many cases, employers will shift more costs to employees. For example, 63% of respondents said they will boost the percentage of the plan premium paid by employees next year, up from 57% this year.

In addition, 46% of employers say they will boost out-of-pocket maximums in 2011, up from 36% in 2010. Twenty-one percent say they will raise 2011 copayments or coinsurance for specialist care.

“With cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do ever year,” said Darling.

In addition, the survey found that 20% of employers will offer only a consumer-directed health care plan next year, up from 10% this year.