U.S. Workers Can Expect Rise in Health Care Costs

For American workers already feeling the crunch of soaring gas prices and rising food costs, the last thing they need is another bite out of their paychecks. Unfortunately, that’s exactly what they can expect. With health insurance costs for companies predicted to climb 6.4 percent next year, individuals are likely to see a rise in not only their average health-care coverage premium but also out-of-pocket costs. What does that mean for the average worker? About $300 less each month.

According to an annual study by Hewitt Associates, companies will see their annual health insurance costs increase to $8,863 per employee in 2009. For workers, premium contributions are expected to increase by 8 percent, to an average of $1,946 annually, or $162 per month, and out-of-pocket costs are projected to climb 10.1 percent, or $156 per month. Overall, employees’ total health care costs are projected to rise 8.9 percent to $3,826. “People are getting hit from all over the place,” said Craig Dolezal, principal in Hewitt’s health-management practice. “Companies are hunkering down through this.”

Hewitt uses data from more than 300 major employers and more than 13 million health-plan members to calculate their projections, which are reported as an average per individual worker. Employees with family coverage would tend to pay more and workers with single coverage would tend to pay less. And, since Hewitt’s survey largely focuses on larger employers with an average of 16,000 employees, businesses with fewer workers would also tend to have higher costs than those in the survey.

Although these rate increases aren’t as large as those seen two years ago, premiums and out-of-pocket expenses for workers have tripled in the last decade. Analysts say that these increases are largely due to employers shifting costs to their workers in the forms of high deductibles and copayments. According to Hewitt, more companies are increasing copayments to $250 or higher for emergency room visits in an effort to encourage employees to use urgent care centers and retail health clinics. “Employers continue to diligently manage health-care costs through a combination of approaches, including continued cost shifting, tougher negotiations with health plans, and expanded health and wellness programs with incentives to encourage behavior change, which is why we’re seeing rate increases level out a bit,” said Jim Winkler, North American practice leader of Hewitt’s Health Management Consulting business. “The challenge now will be sustaining or even lowering those rate increases in an environment where the legislative, economic and political landscape is rapidly changing, and where companies are under more pressure than ever to balance their needs with the needs of employees and their families.”

Workers can expect to begin seeing these changes in the coming weeks during the annual open-enrollment season, when employees are allowed to select or change their benefit plans for the coming year.

Meanwhile, Medicare has assured there will be no rise in premiums in 2009 for the majority of its elderly and disabled members. Contributions for these individuals will be fixed at $96.40 for the year. But, according to Richard Foster, chief actuary at the Centers for Medicare and Medicaid Services, this financial relief may be short-lived. “In the future, we’re going to have to go back to raising the premiums to match the increase in expenditure,” USA Today quoted him as saying.