N.C. employers to cut health-insurance costs

North Carolina employers expect to pay a smaller increase in employee health-insurance costs next year, according to a survey released yesterday by Mercer Human Resource Consulting.

The survey also found that slightly more employers will offer a consumer-directed health plan, such as a health savings account, as a cost-reduction strategy in 2010.

Mercer is a human-resource consulting company in Charlotte. It also released an annual study that tracks health-insurance costs nationwide.

The survey of 99 North Carolina employers -- all with at least 10 employees -- found an average projected increase of 4.7 percent over 2009 costs. The employers said they expect to achieve that goal by passing on more costs to their workers or by changing insurance plans or insurers.

Without making those changes, the average increase would be 7 percent.

Mercer cautioned that the employers' projected increases may be conservative. They estimated a 4.9 percent increase for 2009, counting cost-sharing measures, but costs actually rose 8.5 percent.

Steve Graybill, a senior consultant for Mercer, said that since seven more employers were surveyed for 2010 compared with 2009, "it is probably not exactly an apples to apples comparison."

"Small and large employers used different strategies to keep cost growth down in 2009," Graybill said. "Small employers moved employees into low-cost, consumer-directed health plans and raised preferred-provider organization (PPO) deductibles."

N.C. employers expressed more optimism about controlling employee health-insurance costs than the national average.

According to Mercer's national study of 2,914 employers, insurance-plan costs were projected to rise about 9 percent if they renewed 2009 plans without making any changes. They expect to have a 6 percent increase after making cost-shifting changes.

The survey of North Carolina employers found that the average individual deductible for in-network services in a PPO would be $760, compared with nearly $1,100 nationally.

However, for employers with 500 or more workers, the average deductible was $511.

Twenty percent of employers said they would offer a consumer-directed health plan, up from 16 percent in 2009.

"We saw relatively little cost-shifting among large employers," Graybill said. "What jumped out was a real increase in their use of programs and policies designed to improve work-force health."

Many local employers have not yet been told how much their premiums are going up next year, but they are planning for more than 18 percent on average, said Gayle Anderson, the president and chief executive of the Winston-Salem Chamber of Commerce.

"Local employers are increasing deductibles and making other changes to try to keep their cost increases around 4 percent to 5 percent," Anderson said.

The study found that employee health-benefit costs averaged nearly $8,000 in 2009.

About 41 percent of North Carolina employers said they will raise deductibles, co-pays or out-of-pocket maximums for employees -- up from 31 percent in the 2009 survey.

Another 38 percent said they would increase their employees' share of the premium contribution, down from 40 percent this year. Another 17 percent said they would find other means to increase employees' contribution.

"I do think employers are being aggressive in moving to higher-deductible plans and cost shifting more to employees," Graybill said. "Most are driven by the need to manage budgeted cost."

rcraver@wsjournal.com


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N.C. health-insurance findings

A survey of 99 employers based in North Carolina yielded these health-insurance findings for 2010:

• Employers expect to lower their cost increase to 4.7 percent -- from 8.5 percent in 2009 -- by changing vendors and/or passing on more costs to employees.

• About 41 percent of the employers said they would shift costs by raising deductibles, co-pays or out-of-pocket maximum, up from 31 percent in 2009.

• About 38 percent said they would raise employees' share of the premium contribution, down from 40 percent in 2009.

• About 20 percent said they would offer a consumer-directed health plan (such as a health savings account), up from 16 percent in 2009.

• The average monthly employee contribution for employee-only coverage in a preferred-provider organization is $83, up $2 from 2009. For a health-maintenance organization, the contribution would be $94, down $19 from 2009.