Within the context of an ongoing recession, U.S. employers should expect to see an increase of 7 percent in their medical benefit expenditures during the year 2010. According to new data released from a survey by Towers Perrin, both employers and employees will experience the growing effect of continuing cost increases along with the current economic climate, all of which is creating significant affordability challenges. According to the same study, many employers are getting ready to move in the direction of assuming new approaches to their benefits management, approaches that have the possibility of completely transforming current models of health care delivery.
Towers Perrin has an annual survey of Health Care Cost. The current survey suggests a 7% rise in 2010 in medical benefit expenditures. This will mark the sixth successive year of percentage increases of a single-digit, which will mean record-high outlays for both employers and employees. It is projected that average per-employee annual expenditure, in 2010, will exceed $10,000. It is expected that employers will continue to fund 78 percent of the cost, still the actual dollar burden on employees has grown due to an ongoing increase in the cost base and an added impact due to the design of benefits increase of out-of-pocket expenses.
It is projected that during 2010, premium contributions by the employee, will rise on average by 10 percent or in access of $200. This is a larger increase than that of 8 percent was experienced in 2009. The added burden being placed on the employee is the result of indirect cost shifting occurring due to benefit design changes, and example being increases the employee copayment, which will add significantly to the overall cost going to the employee.
Dave Guilmette who is the managing director of the Towers Perrin Health and Welfare practice says that the affordability challenges for employees, associated with this year’s cost increases are even more severe than what is suggested by the general survey results. He adds that by shifting costs employers are taking actions that are consistent with what has been done in past years, none that surprisingly based on the present day economy, the shifts are not as larger as one might expect. Regardless of this, company employees are experiencing the impact of this cost shift more clearly since these actions come at a time when salaries being paid at many organizations are either study or even declining, employer contributions to 401(k) programs are down, and there is a reduction in other rewards such as bonuses and profit sharings. For this reason financial hardships that are being associated with rising employee costs are uppermost in the minds of employees and for many they are not sustainable, says Guilmette.
For more than twenty years employers have been looking to the Towers Perrin Health Care Cost Survey for information providing the industry's most in-depth, forward leaning perspective on health care costs. Included in the present study is detailed information on the health benefit programs that are being made available through about 300 of the nation's biggest employers. The health care coverage being provided by these companies involves about 5.2 million employees and their dependents, with a collective expenditure of $29.4 billion on health care every year, representing a significant force for change in the health care marketplace.
Tags: health insurance