Survey Predicts Rise in Health Insurance Premiums in 2012

Added Cost to Company Insurance Plans Likely to Cause More Cost Passed to Employees

by Derek Campbell on September 22, 2011

A new survey has reported estimates of a 5.3 percent increase in the cost of health care benefits in 2012. While it is actually the lowest predicted rise in 15 years, because the inflation rate is only at 3.9 percent, it will create added pressure on company-wide plans. The result could mean more reliance on the healthcare reform plans passed by the Obama administration or a higher percentage cut from paychecks in order to pay for the same plan.

The survey, conducted by Mercer, found that responding employers have been attempting to offset rising costs by forcing employees to pay more for plans, raising deductibles, and switching to plans which cost less. Employers reported that their benefit costs would increase by 7.1 percent next year, a drop from previous annuals rises, but still enough to keep business scrambling to keep costs to a minimum.

According to survey approximately one-third of employers plan to raise co-payments or deductibles next year. Currently, the median in-network deductible for a PPO plan is about $500 for large companies and $1,000 for smaller ones.

One option some companies have to cut costs may be starting wellness programs in the office. Preventative measures to keep workers living healthier lifestyles can result in fewer doctor’s visits and other long-term health problems. “A lot of data out there shows wellness programs save anywhere from $4.86 for every dollar spent all the way to $6 or $7,” says Fiona Gathright, president of Wellness Corporate Solutions, “Somewhere around 70 percent of companies have some sort of wellness program in place.”

According to Susan Connolly, a Mercer partner in its Boston offices, “Earlier risk identification and health education … are keeping people with health risks and chronic conditions away from the emergency room. And consumers are more aware that overuse and misuse of healthcare services will directly impact their wallets as well as their employer’s budget.”

Of course a reported drop in doctor visits may also be because of the current economic problems. Many workers may lack the funds necessary to pay for medical costs. This results in far fewer check-ups and other non-urgent medical treatment. If this is the case, it could result in higher health costs further down the road as health problems, which could have been treated early, become more expensive when they reach a state advanced enough to force professional medical treatment.

The results of the Mercer survey are not fully compiled. Only 1,600 companies have responded, but the consulting firm expects to release a complete report before the end of 2011, which will include responses from 2,800 companies.

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