Employers shift to underinsurance
Health benefit cost growth predicted to ease slightly in 2009 as employers shift cost
Mercer
September 4, 2008
After three years of double-digit growth in the first half of the decade, annual health benefit cost increases slowed to about 6 percent in 2005 and have stayed there ever since.
Mercer’s complete survey results won’t be released until later in the year, but for the 1,317 employer health plan sponsors that have responded so far, the total cost to renew their current health plans — if they were to make no changes — would grow by nearly 8 percent on average. Small employers (those with 10-499 employees) would see an even higher increase, of about 10 percent. However, the majority of respondents say they will take action to lower their actual cost increases.
“It’s a relief to see cost growth trending down, even slightly,” said Blaine Bos, a senior Mercer health and benefits consultant based in Minneapolis. “But this is not an unqualified success story. While some employers are holding down cost growth with innovative methods of improving health care quality and efficiency, more typically employers struggling with increases they can’t handle resort to the tried and true method of shifting cost to employees.”
Well over half (59 percent) of employers taking action to reduce their 2009 cost increase will raise deductibles, copayments, coinsurance or employee out-of-pocket spending limits. Employee cost-sharing has risen sharply over the past five years.
http://www.mercer.com/summary.htm?idContent=1319885
Comment:
By Don McCanne, MD
Is it good news that employers’ health benefit cost growth is easing slightly? No. If you look at the full picture, it’s terrible news. Health care costs are continuing to increase at an unsustainable rate, but employers are dumping the problem onto the backs of their employees by “the tried and true method of shifting cost to employees.”
Products available in the individual insurance market are no longer providing adequate protection because of increases in deductibles, copayments and coinsurance that trade off affordable premiums for unaffordable access to health care - the very definition of underinsurance.
Employers are now seeking relief from the costs of their health benefit programs by following the lead of the individual market and converting their programs into underinsurance plans.
Reform proposals that would expand competition of plans in the individual market won’t work because most of the plans will be underinsurance products if the premiums are to be competitive. Reform proposals that would expand on employer-sponsored coverage won’t work if that sector becomes saturated with similar underinsurance plans.
If we regulate the markets to prevent the sale of underinsurance products, then the increase in health care costs will continue to make premiums unaffordable for either employers or individuals.
If we really do want everyone to have affordable access to all necessary health care, we have no option but to establish a universal risk pool that is equitably funded, and then to take advantage of our own monopsony to provide us with greater value in our health care purchasing. We are already at that point, and there is nowhere else to turn.