Employers Seek to Limit 2010 Health Cost Increases, Survey Finds

Employers are expecting a nearly 9 percent increase in the cost of their group health care plans in 2010 but plan to trim that increase to 5.9 percent through a variety of cost-cutting actions, early responses to an annual survey by Mercer indicate.

Although employers try to reduce their projected cost increases every year, survey respondents say they are cutting their health care benefit budgets more than usual for 2010 because of the recession.

In fact, employers most strongly affected by the recession reported both a higher underlying cost trend, 9 percent, and a lower targeted cost increase, 5.4 percent, on average than unaffected employers, which anticipate an 8.5 percent growth rate that they plan to trim to 6.3 percent.

Linda Havlin, a worldwide partner at Mercer based in Chicago, attributed the higher costs among recession-affected employers to a surge in stress-related illnesses among employees and layoffs.

“Actual or feared loss of employer-subsidized coverage makes people think about filling their medications, getting their preventive care and taking care of any elective procedures that they have postponed,” she explained.

Among the most popular measures employers are using to lower their 2010 health care cost trend are eliminating higher-cost or more generous health plan options as a way to move employees into lower-cost options, such as high-deductible consumer-directed health plans; auditing plans to ensure that all covered dependents are actually eligible for coverage; and adding or renegotiating performance guarantees with plan vendors.

These preliminary findings are based on responses from 1,562 employers. The survey is still being conducted, and complete results, including the actual rate of increases employers experienced in 2009, will be released by year’s end.

Filed by Joanne Wojcik of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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