WASHINGTON — A growing number of workers in 2009 will pay more for health benefits — and in some cases receive less coverage — as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.
The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9 percent in 2008. But 30 percent of the employers said they expected to raise deductibles an average of 14 percent in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44 percent planned to increase employee-paid portion of premiums in 2009, compared with 40 percent in 2008.
The economic slowdown, according to analysts, is making it more difficult for many employers to subsidize health care costs at previous levels. On average, experts say, benefit packages contain the biggest increases for workers since the recession of 2001. Workers’ health costs are rising much faster than wages.
The cost-shifting is one more piece of bad news battering consumers, analysts said, reducing their spending power and giving them one more reason to hold on to their money. Adding to consumers’ financial squeeze is the plummeting stock market, which has crushed retirement funds. Many companies, including Sears, Starbucks, FedEx and GM, have stopped matching workers’ 401(k) contributions.
To cut costs, employers increasingly are introducing high-deductible “health savings accounts” and focusing on wellness programs aimed at keeping workers healthy through diet and exercise.
Ten years ago, employers on average paid about 90 percent of their workers’ health costs, said Shub Debgupta, senior director of the Benefits Roundtable at the Corporate Executive Board. That is down to 73 percent, Debgupta said, and is expected to drop to 70 percent over the next few years.
Children’s Hospital and Research Center in Oakland, Calif., which previously charged workers nothing for health insurance, this year is requiring nonunion employees to pay up to $225 a month for dependents and is increasing deductibles by $100, a spokeswoman said. The hospital is losing millions of dollars on public-assistance patients whose care is not fully reimbursed by the federal government, a situation that worsened when the state’s unemployment rate soared to 8.4 percent.
Some small businesses, which lack financial reserves to offset revenue losses and have fewer workers to spread the insurance risk, are shifting even more to employees.
Officials at Maloney & Fox, a marketing firm in New York, opted this year to reduce the employer-paid proportion of health coverage from 80 percent to 50 percent as an alternative to laying off workers.
“We’ve had two clients drop off (and remaining clients are) being conservative with their marketing dollars,” said Margie Fox, co-president.
Even government employees are feeling the pain.
“I’m hearing from (federal workers) across the country that once their January pay raise is implemented they will take home less because of the increase in their health insurance premiums,” said Colleen Kelley, national president of the 150,000-member National Treasury Employees Union based in Washington. The workers on average will get a 3.9 percent raise, but, depending on the plan they have, their health care premiums will increase 7 to 13 percent, Kelley said.
Premiums in 2008, she added, rose between 2.1 percent and 8.5 percent.
Premiums for employer-sponsored plans over a decade on average have risen to $12,680 a year from $5,791, according to the Henry J. Kaiser Family Foundation. The median deductible for the plans was $1,000 in 2008, compared with $500 from 2001 to 2007, according to a survey of 2,900 employers conducted by Mercer.
To cut costs, employers increasingly are offering health savings accounts. The plans, which were pushed by the Bush administration, allow workers to set aside up to $5,950 tax free to cover medical expenses in exchange for an insurance plan with low premiums and a deductible as high as $3,000.
Unlike money in flexible spending accounts, which workers can lose annually if not used, leftover contributions to health savings accounts can be rolled over from one year to the next.
Last year, 8 percent of U.S. employees were using a health savings account, up from 4 percent a decade ago, according to the Kaiser foundation.
“The goal of a high-deductible health plan is for everyone to treat medical care like they buy a car or a vacuum cleaner and do comparative shopping,” said Sharon Bohlman, president of Strategic Benefits Solutions in Vienna, Va.
Bohlman said in general such accounts work well for single, healthy people.
