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Health-benefit survey sees changes for 2009
Employers expecting workers to pay more
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Published: November 20, 2008
North Carolina employers expect the increase for employee health insurance in 2009 to be lower than last year's, according to a study by Mercer Human Resource Consulting released yesterday.
They plan to meet the goal of a 4.9 percent increase -- compared with a 6.6 percent increase in 2007 -- by passing more costs on to their workers or by changing plans. The 92 employers surveyed by Mercer said that if they didn't apply those strategies, the increase would be 7.1 percent.
Mercer is a human-resource consulting company in Charlotte. The company also releases an annual study that tracks health-insurance costs nationwide.
The study found that the total health-benefit cost was an average of $7,798 for each employee.
About 31 percent of employers said they will raise deductibles, co-pays or out-of-pocket maximums for employees, while 40 percent said they would increase their employees' share of the premium contribution. Another 10 percent said they would find other means to increase employees' contribution.
"I think in general, employers are raising cost sharing -- deductible and coinsurance -- to keep the plan as affordable as possible," said Steve Graybill, Mercer's senior health-care analyst.
Many local employers have not yet been told how much their premiums are going up next year, but they are planning for more than 10 percent on average, said Gayle Anderson, the president and chief executive of the Greater Winston-Salem Chamber of Commerce.
"They are increasing deductibles and the amounts employees are paying in monthly premiums," Anderson said. "Interestingly though, in a survey we did throughout the 12-county region with chamber members, we did not find any companies that said they were eliminating health-care insurance as a benefit."
According to Mercer's national study, also released yesterday, there was a slight increase in employers providing health insurance at 65 percent, compared with 63 percent in 2007.
The survey of N.C. employers found that the median deductible for individual coverage in a preferred-provider organization, or PPO, health plan was $1,000 in the Southeast -- the same as the national average and up from $500 last year.
A PPO is a popular plan that allows patients to see doctors who are outside the insurance plan's network, but patients must typically pay more in co-payment costs. It is the most popular health plan, enrolling 69 percent of all covered employees nationally and 82 percent of the N.C. survey respondents.
Graybill said that more employers are being influenced by the increasing popularity of Health Service Accounts and their high deductibles. The money can be withdrawn tax-free when used for medical expenses.
"The introduction of the HSA may have changed employers' thinking on just how high a deductible can go without causing employees to revolt," Graybill said. "Raising the deductible has become the fallback for employers faced with cost increases they can't handle. It's the easiest way to reduce cost without taking more out of every employee's paycheck."
Mark Wright, a spokesman for Wake Forest University Baptist Medical Center, Winston-Salem's biggest employer, said that the only change to existing plans "was a slight increase in deductibles in the WFU Health Sciences employees' plan."
"Both the WFU Health Sciences and N.C. Baptist Hospital plans are offering new options for 2009 that give employees more flexibility to decide whether they want more coverage or lower premiums," Wright said. "Both plans now have a value option, with very low premiums."
Mercer said that employers who have made job cuts -- or plan to make them in 2009 -- should expect a significant rise in their health-care costs in the short term.
"When job security is in jeopardy and insurance is tied to employment, consumers rush to get care they might otherwise delay," Mercer said.
In the Triad alone, there are more than 2,300 employees whose jobs have been cut in recent months, including at Hanesbrands Inc. in Eden and Winston-Salem, R.J. Reynolds Tobacco Co. and Reynolds American Inc., Furniture Brands International Inc. in High Point, Thomas Built Buses Inc. in High Point and Triad Guaranty Inc.
There's also increasing anxiety about how many of Wachovia Corp.'s 2,900 local jobs will be cut or transferred as Wells Fargo & Co. merges with the bank over the next two years.
"Higher employee cost-sharing -- like a $1,000 deductible -- could prevent that spike in utilization that we've seen in other recessions," Graybill said. "We all share concerns around folks avoiding care or not being compliant with treatment regimen because they cannot afford it. I have not seen significant data that tells us care is not affordable and being avoided."
The study also found that more employees don't have early-retiree health coverage in their future. Only 27 percent of large employers nationally offer early-retirement health coverage in 2008, compared with 46 percent in 1993.
"Companies that hope to reduce their work force through attrition, rather than layoffs, may find older workers hanging on longer because they don't want to lose their health benefits," Graybill said.
■ Richard Craver can be reached at 727-7376 or at rcraver@wsjournal.com.
N.C. health-insurance findings
A survey of 92 employers based in North Carolina yielded these health-insurance findings for 2009:
• Employers expect to lower their cost increase to 4.9 percent -- from 6.6 percent in 2008 -- by changing vendors and/or passing more costs onto employees.
• About 31 percent of the employers said that would shift costs by raising deductibles, co-pays or out-of-pocket maximums.
• About 40 percent said they would increase employees' share of the premium contribution.
• About 24 percent said they would offer a consumer-directed health plan (such as a Health Savings Account), up from 20 percent in 2008.
• The average monthly employee contribution for employee-only coverage is $81 for a preferred-provider organization, $113 for a health-maintenance organization and $62 for a consumer-directed health plan.
SOURCE: Mercer Human Resource Consulting
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