Employers Struggle to Put a Cap on Healthcare Costs

The survey, by Henry J. Kaiser Family Foundation and the Health Research and Educational Trust, found that an American family shells out an average of $174/month for coverage even though companies pay as much as 75% of the health bills.

The premium price hike was up to an average $3,060 for singles and $7,954 for family coverage according to the survey.

Struggling to rein in the costs, employers appear to be embracing the same approaches already in evidence – asking workers to pay a greater share of the rising costs. 

When large firms were asked to predict the types of changes they would make in the next 12 months, nearly eight of ten said they are very or somewhat likely to increase employee premiums; just over half said they are very or somewhat likely to increase the amount employees pay for prescription drugs; and 42% said they are very or somewhat likely to increase the amount employees pay for deductibles.

Strategic Shifts

An increasing number of firms are moving to three-tiered cost-sharing benefits to keep prescription drug costs under control. A three-tiered benefit uses different copayments for generic drugs, brand name drugs with no generic substitutes (“preferred drugs”) and brand name drugs with generic substitutes (“non-preferred drugs”), according to the survey

In 2002, 57% of covered workers had a three-tiered prescription drug benefit, a jump from 36% of covered workers under such plans in 2001.

Overall, 34% of large companies offer retiree benefits, roughly the same as last year – but well off the 66% in 1988. This year’s survey found that 9% of large firms (200 or more workers) eliminated retiree benefits for new hires or existing employees in the last two years.

Sick Daze

Other parts of the sobering picture of the US health care landscape sketched out in the Kaiser survey include:

• employees are paying more for prescriptions or to see a doctor – 27% or $95 more than last year for singles and 16% or $283 more for family coverage
• for the first time in four years, more workers experienced reduced benefits than increased benefits – 17% of covered workers are in firms report that they offered employees a lower level of health benefits than last year
• some hospital chains are upping prices
• rising health premiums may translate into fewer employers offering coverage, which may lead to more uninsured Americans
• deductibles for PPO in-network providers rose 37% to $276 in 2002, up from $201 last year.

Employees in PPO plans, the predominant type of plan, paid an average annual deductible of $276 for “in-plan” care this year, up 37% from the $201 deductible in 2001.

The 3,262 firms surveyed range in size from three to more than 300,000 employees.

For more material about the study, go to the Kaiser Web site .