Employer health costs slowing, but still face 9 percent increase in 2011

PriceWaterhouseCoopers is estimating that employer health costs will rise 9 percent in 2011, slightly less than they rose in 2010, Reuters reports. "The PriceWaterhouseCoopers team questioned 700 companies in 30 industries for the report. About 60 percent of Americans under the age of 65 get health insurance through an employer. Health benefits are often a major part of any employee compensation package. Most employers, 63 percent, offer a [managed-care] preferred provider organization or PPO, the survey found. And many have raised the deductible, with 43 percent having a deductible of $400 or more, compared to 25 percent in 2009." To try to help control expenses, two-thirds of companies plan to expand wellness programs, but fewer than half offer weight management programs.  (6/14).

Chicago Sun-Times: "Employers also are increasingly adopting co-insurance benefit designs that were prevalent before managed care, said Kathryn Stein, managing director in the firm's Chicago office. Under co-insurance plans, you have a deductible, but no co-pay, instead paying a percentage of the cost for an office visit, for example, or certain prescription drugs" (Knowles, 6/15).

CNN Money: "One major issue for companies: Cash-strapped hospitals and health providers will likely push more costs to employers. Hospitals are facing Medicare rate cuts, while more health providers are merging -- which means they'll be able to negotiate higher rates. On the other hand, some changes are driving employers' health expenses down. For example, the cost of providing COBRA coverage -- which lets some workers who quit, are laid off or otherwise leave their jobs to extend their health plans -- should return to 'more normal levels' in 2011, saving employers money. Also, several major brand-name drugs, including Lipitor, will lose their patents in 2011, opening them up to competition from cheaper generic versions" (Pepitone, 6/14).

MarketWatch: "Hospitals are shifting costs from Medicare to private payers, while physicians are opting out of private practice and joining larger groups in order to strengthen their bargaining position with insurers. 'Health reform delivers only a minor impact on the underlying medical cost trends in 2011 and introduces hundreds of changes in the health-care system designed to reduce costs and improve efficiencies in the long term,' Kelly Barnes, PriceWaterhouseCoopers' U.S. health industries analyst, said in a prepared statement" (Britt, 6/14).

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This article was reprinted from khn.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.