Large Employers Predicting 2011 8.9% Health Cost Spike

August 18, 2010 ( – A new National Business Group on Health (NBGH) survey finds that large-sized employers are looking for an average 8.9% health care cost hike for 2011, up from an average 7% this year.

A news release from NBGH, which represents large organizations, said 63% plan to increase employee contributions to their coverage premium in 2011, up from 57% this year, while 46% plan to raise out-of-pocket maximums next year, up from 36% this year.

Meanwhile, 53% are anticipating changes to their benefit plans despite the uncertainty around health care reform, and 19% are scaling back alterations they planned to make while an equal number are making no changes. According to the announcement, 70% said they will remove lifetime dollar limits on overall benefits while 37% reported they will make changes to annual or lifetime limits on specific benefits. Twenty-six percent will remove annual dollar limits on overall benefits while 13% will remove pre-existing condition exclusions for children. 

More than six in ten (61%) employers will offer a consumer-directed health plan (CDHP) in 2011. While the most common type of plan employers will offer is a high-deductible program combined with a health savings account (64%), the number moving to a full replacement plan doubled from 10% this year to 20% in 2011.

Other survey findings include:      

  • With the health reform law making Medicare Part D benefits richer as the “doughnut hole” closes between now and 2020, 5% plan to drop retiree health coverage in 2011 while 60% are considering doing so.    
  • Forty-one percent of employers offered premium discounts for completing health assessments while 22% offered premium discounts for participating in tobacco cessation programs.
  • Twenty-five percent of employers plan to raise the co-pay or co-insurance for retail pharmacy prescription drug benefits while 21% plan to do the same for mail-order pharmacy benefits.

“While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority. They have to foot the bill, not the government,” said Helen Darling, president of the National Business Group on Health, in the news release.  “In fact, with cost increases expected to accelerate next year, many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year.”

The survey, based on responses from 72 of the nation’s largest corporations representing more than 3.7 million employees, was conducted in May and June, 2010. The poll report is here.