Rising health benefits costs slowing

Health benefit costs will increase in 2009 by just under 6 percent. This would be a slightly slower rate compared with the past several years, according to Mercer, the benefits consulting firm that calculated health cost growth of about 6 percent each year since 2005.

Mercer’s finding that health benefits costs are slowing down next year echoes the same message previously delivered by Aon, and covered here in Health Populi in August. However, Aon projected nearly 10 percent health cost growth.

Mercer forecasts that 5.7 percent would be the lowest increase in more than 10 years.

In total cost terms, Mercer calculates that costs would grow 8% if employers made no changes to their current plans. Small employers (defined as those with 10-499 employees) would bear double-digit increases of 10%.

But employers will make changes to health plan benefit design — in particular, increasing cost-sharing with employees by raising deductibles, copayments, coinsurance and employee out-of-pocket spending amounts.

Mercer has calculated that between 2003 and 2007, the median family deductible for in-network services in a PPO rose 50% from $1,000 to $1,500.

Mercer’s final survey will be released later in the year as data is still being collected. Thus, consider this forecast a preliminary one where the "N" of employers is 1,137. By the time Mercer finalizes the survey, some 3,000 employers’ data will be analyzed.

Jane’s Hot Points: Small is not beautiful, at least when it comes to buying health insurance on behalf of employees. But it’s small businesses — where companies employee 10 to 499 employees — that is the growth segment for jobs in the U.S. The ‘free market’ for health insurance is skewed in favor of large purchasers. Keep this in mind when you’re assessing health reforms in this political season of lies, damned lies, and statistics.

2 replies »

  1. Yet another piece of good news that, because it does not fit the narrative of doom and Titanics hitting icebergs, will simply be discarded. Just last week, the proportion of Americans w/o health coverage declined by a full half percentage point (2006-2007).
    But the end of the world is still at hand- let’s hide under the lifeboat cover so we can be the first in. . .

  2. Just remember – this is the cost of health “benefits”; not the cost of health “care”.