Cost uncertainty roils health care even before 2014

Posted: September 13, 2012

The great unknown looms - what will happen to employer-provided health insurance in 2014 when the main provisions of the Affordable Care Act kick in, if they kick in, depending on the election?

Then there is the matter of 2013.

Early responses from a survey conducted by Mercer Inc., the New York-based employee and benefits consulting firm, indicate that employers expect premium increases of about 8 percent in 2013, Mercer said Tuesday.

By the time employers renegotiate with their insurers, make trims to their offerings, and pass costs on to employees, the employer share will go up 6.5 percent.

"Shifting costs to employees is not going to impact your trend of rising health costs," said Renee Frisch, a Mercer senior consultant in its Philadelphia office.

"For years, employers have been looking at other ways to mitigate the trend," she said. "But at the end of the day, if they need short-term cost savings, the fastest way is to increase co-pays or increase deductibles."

Mercer released its preliminary survey results the same day the Henry J. Kaiser Family Foundation in California, in cooperation with the Chicago-based Health Research and Educational Trust, released its annual opus, all 242 pages of it, on the state of employer health benefits.

More than 149 million Americans receive their health benefits through their employers, Kaiser reported.

A monthly U.S. Labor Department survey also released Tuesday showed that in June, health insurance counted for 8 percent of an employee's total compensation in the Mid-Atlantic states.

While Mercer found that employers, mostly large employers with more than 500 employees, paid 5.7 percent more in 2012 than they did in 2011 for health benefits, Kaiser put the number at 4 percent for family coverage and 3 percent for single coverage.

Kaiser, which researches health policy, conducted its survey, focusing on 2012 data, in January through June, while Mercer's survey ended last week, as companies shopped around for next year's coverage.

Kaiser reported that it cost $15,745 to cover a family of four, up from $15,073 in 2011, with employees kicking in $4,316, or 28 percent.

Single employees contributed $951 a year, or 18 percent, to an average 2012 premium of $5,615, up from $5,429.

Given that premiums rose a cumulative 51 percent between 2002 and 2007, the 4 percent rise in 2012 is relatively benign, said Drew Altman, president of the Kaiser Foundation.

But Altman stopped short of attributing the moderation to influence of the Affordable Care Act, described as "Obamacare" by opponents.

"Presidents always get the credit and the blame for everything in the economy, and 4 percent is simply good news," Altman said.

But, there is a caveat.

Since 1999, when Kaiser began its study, premiums have gone up 180 percent and employee contributions 172 percent, but wages are up only 47 percent.

"That's why what looks like moderation to experts doesn't feel that way to working people," Altman said.

And it may feel even more painful to low-wage workers. According to Kaiser, companies with a high proportion of low-wage workers asked their employees to contribute more of their wages to family health coverage compared with companies with a high proportion of high-wage workers.

Kaiser defines low-wage as below $24,000 a year and high-wage as above $55,000.

"It's been a nightmare with increases," said Barbara Marshall, vice president of human resources and payroll at Aus Inc., in Mount Laurel. She said insurance premiums will go up 7 to 8 percent in 2013.

Employees at the research, consulting, and valuation firm pay 48 percent of the share of insurance. One family plan costs $1,760 a month and employees contribute $845.

For Marshall, the journey to the great unknown - 2014 and the implementation of much of the Affordable Care Act - begins this month.

That's when Aus will begin to launch a study of its employment practices, focusing on whether the number of hours worked by part-timers will qualify them for coverage in 2014.

"I've only got bits and pieces of information," she said, adding that the prospect of evaluation, decision-making, and even understanding the law seems overwhelming as 2014 draws closer.

Then, no matter what they decide, "you know, it might all change if Romney gets in," she said. "I expect it to be a nightmare, a nightmare."


Contact Jane M. Von Bergen at jvonbergen@phillynews.com, @JaneVonBergen on Twitter, or at 215-854-2769. Read her workplace blog at www.philly.com/jobbing.

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