Many Employers to Raise Cost of Health Benefits, Survey Finds

By David S. Hilzenrath
Washington Post Staff Writer
Wednesday, September 16, 2009

Though Americans who already have medical coverage may be wary of change, a new survey indicates that they may be hard-pressed to escape it -- even in the absence of health-care reform.

As businesses contend with rising costs, many workers face an erosion of health benefits next year, according to an annual survey released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust.

Forty percent of employers surveyed said they are likely to increase the amount their workers pay out of pocket for doctor visits. Almost as many said they are likely to raise annual deductibles and the amount workers pay for prescription drugs.

Nine percent said they plan to tighten eligibility for health benefits; 8 percent said they plan to drop coverage entirely. Forty-one percent of employers said they are "somewhat" or "very" likely to increase the amount employees pay in premiums -- though that would not necessarily mean employees would pay a higher percentage of the premiums. Employers could simply be passing along the same share of the overall increase that they are doing this year.

The authors of the study said the findings underscore the need for federal action to rein in costs.

The survey is one of several reports providing fresh ammunition to President Obama as he struggles to overhaul the nation's health-care system. One of his biggest challenges has been winning over Americans who are satisfied with their existing coverage.

A major business lobby weighed in Tuesday, saying that if current trends continue, annual health-care costs for employers will rise 166 percent over the next decade -- to $28,530 per employee.

"Maintaining the status quo is simply not an option," said Antonio M. Perez, chief executive of Eastman Kodak and a leader of the Business Roundtable. "These costs are unsustainable and would put millions of workers at risk," Perez said in a statement.

Rather than letting the trends go unchecked, employers will probably adopt a variety of cost-saving measures, said Helen Darling, president of the National Business Group on Health, an alliance of corporations. Those steps could include giving employees financial incentives to participate in weight-loss programs, order prescription drugs by mail and undergo health assessments, she said. In addition, before workers pursue costly procedures such as back surgery, they could be required to receive briefings that explain the potential downside of the treatment, Darling said.

Almost two-thirds of corporations surveyed by the Mercer consulting firm plan to call on employees to pay a greater share of health plan costs next year, according to a report last week.

The Kaiser Family Foundation survey, released Tuesday, obtained in-depth responses from more than 2,000 private firms and non-federal public employers. The foundation focuses on health issues; its collaborator, the Health Research and Educational Trust, is affiliated with the American Hospital Association. Annual premium increases for families, which totaled 13 percent in 2002 and 2003, have held steady at 5 percent since 2007, the groups reported. Premiums for single coverage did not rise significantly in 2009, breaking a long-standing trend.

However, premiums have continued to rise faster than wages and overall inflation, the survey found. Though family premiums for 2009 rose 5 percent, during the 12-month period ending in April, general inflation fell 0.7 percent.

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