The increase was more precipitous for nearly a quarter of the 219 surveyed companies, who reported premium spikes of more than 20%. These rising costs are taking their toll, as 43% of the surveyed companies say health care costs now represent 11% to 20% of total payroll costs , according to the American Society of Employers’ 2003 Health Care Insurance Benefits Survey.
With the significant increases passed down by major insurers in the Metro Detroit area, companies have begun to look for cost containment strategies and re-examine every aspect of their coverage. The single most common cost-containment strategy in 2003, implemented by 67% of respondents, was to increase each employee’s share of health care costs, up from 47% doing so in 2001. In terms of specific cost-sharing activities, an increase in the premiums paid by employees was the most common approach and in every case, the number of companies paying 100% of the premium has dropped from data reported in 2001.
Further, employers took a closer look at their prescription drug plans as a source of possible savings. Almost 19% of employers now require a generic alternative to brand name drugs. This move comes in addition to other cost containment strategies that include offering mail-order prescription services and requiring higher co-pays for brand-name drugs.
Looking toward the medical coverage there appears to be a push toward consumer-driven health plan designs. C onsumer-driven health plans, are a new concept, and no generally agreed-upon definition of their basic elements exists. The principal idea, however, is to shift responsibility for health insurance choices from the plan sponsor to employees, with the sponsor fixing costs (SeeSpend Thrifts at Lower Costs ).
In this study, 63% of participants reported offering a Section 125 Cafeteria Plan, a pre-tax flexible spending account, to employees in 2003. Along these lines, 73% of companies offer a Medical Flexible Spending Account, while 7% offer a Direct Medical Reimbursement Plan to their workers.