Employers Report Slowing Rise in Health Plan Costs

June 24, 2005 (PLANSPONSOR.com) - A survey by Kibble & Prentice of nearly 250 Washington state employers shows the rate of increase in health plan costs has decreased for the companies and they are passing the savings on to employees.
By PS

According a news release from the Seattle insurance and financial services firm, increases in medical premiums still pose a problem for the state’s companies, but the rate of increase has dropped considerably. The survey results showed 50% of employers reported increases of between 0% and 10% this year compared with 60% of employers reporting increases of between 11% and 30% last year. The news release attributes this decrease to changes in benefits programs such as increasing deductibles.

In addition, data from 2003 forward shows the trend for passing savings to employees almost reversing. In 2004, 53.7% of employers increased deductibles for plans. That’s an increase in the reported 32% in 2003. In 2005, the number dropped back to 31%. The survey also showed last year that 30% increased office visit co-pays and prescription drug co-pays while 25% did this year. Last year, 30% increased employee coinsurance or out of pocket maximums while this year only 13% did.

Only 13.7% of employers say they plan to increase deductibles, less than 10% say they plan to increase employee co-pays, and less than 15% indicate they will increase employee co-insurance.

In spite of the favorable results, most (92%) employers still ranked cost as their greatest challenge regarding employee benefits. While Health Savings Accounts have been highly touted, the states employers seem reluctant to adopt one. In 2004, 9% had implemented a HSA plan, 31% said they expected to in the following year, and 31.1% said they would not implement one at all This year only 4% reported implementing one, 38% are considering one, and 51% said they won’t.

More information about Kibble & Prentice is at www.kpcom.com .

-Rebecca Moore

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