Paychecks to shrink because of higher health premiums

By Jeffrey Young
(c) 2010 Bloomberg News
Wednesday, August 18, 2010; 12:26 PM

Aug. 18 (Bloomberg) -- Workers will pay more for their health care next year as U.S. companies prepare for provisions of the overhaul signed into law by President Barack Obama, according to a survey released today.

About 63 percent of businesses plan to make employees pay a higher percentage of their premium costs in 2011, said the Washington-based National Business Group on Health, which surveyed 72 companies that employ more than 3.7 million people. The survey showed 46 percent plan to raise the maximum level of out-of-pocket costs that workers must bear.

The companies surveyed expect their costs of health-care benefits to rise an average of 8.9 percent next year. The legislation Obama signed in March will contribute an estimated 1 percentage point to the higher expense, Helen Darling, the business group's president, said at a press conference in Washington today. Employee-paid portions may see small increases, she said.

"They're usually very small increments," Darling said. "It could be as little as 1 percent."

Employers may be using the health-care law as cover for changes they already planned to make to their benefits, said Igor Volsky, a health-care researcher at the Washington-based Center for American Progress, which supported the overhaul.

"Costs are always increasing but they're going to blame what they're going to blame," Volsky said yesterday before the survey's results were released.

The companies, each of which has at least 5,000 workers on its payroll, said they expected their health-benefit costs to rise 7 percent this year, half a percentage point higher than employers estimated in a separate survey released by the National Business Group on Health and the consulting firm Towers Watson & Co. in March.

The health-care overhaul was designed to help rein in rising costs while enabling employers to make adjustments to their benefits, said Jessica Santillo, a spokeswoman for the Department of Health and Human Services. "As was the case before the Affordable Care Act was enacted, employers have flexibility to make choices about how to design or revise their health care plans," Santillo, who had not seen the survey, wrote in an e-mail yesterday.

About 57 percent of the employers in today's study said their workers paid a higher portion of their premiums this year, and 36 percent of the companies increased the out-of-pocket maximums this year.

Companies said they plan to offer more so-called consumer- directed health benefits, such as insurance with high deductibles paired with tax-free health savings accounts. Twenty percent of companies will replace their current offerings with such plans in 2011, according to the survey, compared with 10 percent who did so this year. Wellness programs, including those that offer discounts for weight-loss, smoking-cessation and other lifestyle changes, are among the more-popular benefit changes planned for next year.

The National Business Group on Health was founded in 1974 to advocate for business interests on national health-care policy. The group's roster of almost 300 members includes Wal- Mart Stores Inc., General Electric Co. and Chevron Corp.

© 2010