Employers to Cut 3% off Health Benefit Cost for 2010

September 10, 2009 (PLANSPONSOR.com) - If employers made no changes to their employee medical plans in 2010, they would see cost rise by nearly 9%, according to Mercer, but preliminary survey findings indicate that respondents plan to shave 3% off their annual renewal rates through a variety of cost-saving actions - holding overall cost growth to 5.9% next year.

O f the 1,562 employer health plan sponsors that have responded so far to Mercer’s National Survey of Employer-Sponsored Health Plans 2009 , nearly a third ( 31% ) say that the economic recession has had a “strong negative effect” on their business, with another 49% experiencing a “somewhat negative effect , according to a press release . Those most strongly affected by the recession report both a higher underlying cost trend ( 9 % for 2010 ) and a lower targeted cost increase ( 5.4 %) on average than those employers reporting that their organizations have not been affected by the recession (8. 5% and 6. 3% , respectively)

The preliminary findings show that e mployers’ first line of defense against rate increases is shifting cost to employees . In 2010, nearly two-thirds of respondents (63 % ) will again ask employees to pay a greater share of health plan costs, most commonly by requiring them to pay a higher portion of the monthly premium (40 % of respondents) and/or by raising deductibles, copays/coinsurance or out-of-pocket maximums (39 % ) .

Nearly a fifth of the respondents (18 % ) are eliminating high-cost or more generous health plan options as a way to move employees into lower-cost options, such as consumer-directed health plans (CDHP) . In Mercer’s 2008 survey, 14 % of small employers (those with 10-499 employees) and 25 % of large employers (500 or more employees) said they would be very likely to offer a CDHP in 2009 . F rom a smaller survey conducted in March 2009, Mercer estimates those numbers are likely to rise significantly.

Other cost-cutting actions for 2010 include auditing plans (39%) , for example, to ensure that all covered dependents are actually eligible for coverage, and adding or renegotiating performance guarantees with health plan vendors (20%) . Forty-three percent of employers responding so far said they will put their medical plans out to bid.

Complete results of theNational Survey of Employer-Sponsored Health Plans 2009will be released later this year and will reflect responses from an expected 3,000 employers.