The cost of providing health care to employees increased 8.5 percent this year in Colorado, pushing the average annual price per worker to $7,952, according to a survey being released today by Mercer Health & Benefits.
The national average cost of health coverage increased 6.1 percent to $7,523 per worker, New York-based Mercer reported.
The national increase represented the third consecutive year that health benefit costs grew at a single-digit pace, the report said. The growth rate of costs was 14.7 percent in 2002.
For 2006, small employers saw a slightly bigger increase than large employers, and so-called consumer-driven health plans, which are the least-expensive, gained favor among employers, especially in Colorado.
“Employers are desperate,” Eric Hirschberg, executive vice president of Denver- based insurance broker Lockton Companies, said of consumer-driven plans. “Costs have gotten to the point that (employers) can’t take it, so they’ve started to shift to these schemes.”
Of the 62 Colorado companies surveyed by Mercer, about 9 percent reported using consumer-directed plans such as health reimbursement accounts (HRAs) or health savings accounts (HSAs).
That’s about three times the national rate, said Chris Watts, head of Mercer Health & Benefits in Denver.
“Colorado has been fairly progressive in adopting newer health care plans,” Watts said of HRAs and HSAs, introduced this decade. “Colorado is a relatively healthy state, and healthy people are more likely to be attracted to these plans.”
Watts said the plans, which are akin to 401(k) accounts for medical costs, are less costly for employers. The plans are linked to high-deductible insurance policies, and workers draw from their fund for all except major medical expenses. The plans are seen by some, including President Bush, as a way to help rein in health care costs.
Critics say the plans do little to help the uninsured gain coverage and favor healthy and wealthy workers.
Employees in HSA plans this year paid an average monthly premium of $41, the study showed. By comparison, employees paid $85 a month for preferred provider organization plans (PPOs) and $76 for health maintenance organization plans (HMOs).
Insurance broker Hirschberg said companies can initially shave up to 5 percent from their health care costs by switching to consumer- driven plans. He said the savings can grow if workers are selective about how often and where they seek care.
Switching to an HRA plan in 2004 has helped Colorado Springs-based nonprofit The Navigators save at least $600,000, said Nadine Thompson, benefits analyst for the Christian missionary group.
“When employees take ownership of these dollars, they spend it much differently than if it were company dollars or insurance dollars,” Thompson said of HRAs, which are funded by the employer.
HSA plans, which are funded by workers, are more popular with business owners than HRA plans, the report showed.
“Small employers are showing a clear preference for HSAs, which don’t require an employer contribution to the account,” the report stated. “In 2007, HSAs will be offered more often by both small and large employers.”
The annual report surveyed nearly 3,000 employers who each employ at least 10 workers. It had a margin of error of 3 percentage points.
Staff writer Will Shanley can be reached at 303-954-1260 or wshanley@denverpost.com.
