http://www.bayeconfor.org/pdf/HealthCareEmployerMandatesJan25.pdf
Bay Area health-care costs lead national increase
Silicon Valley / San Jose Business Journal
Total health benefit costs for active employees of surveyed Bay Area companies with more than 500 employees increased 13.5 percent in 2001 to an average of $5,480 per employee, compared to an increase of 11.2 percent for the national average. The national average spent per employee is $4,924. The Bay Area figures were gleaned from 47 large employers while the national figures included responses from more than 2,800 employers with at least 10 workers on the payroll.
The figures were released today by the consulting firm William M. Mercer Inc.
The national increase of 11.2 percent and the Bay Area's 13.5 percent hike come during a year in which general inflation has held to just 2.1 percent.
The picture for 2002 is no brighter: Employers expect their costs to rise by an average of 12.7 percent on a national basis and by 13 percent in the Bay Area, the Mercer study says.
Other points of the national survey are: Costs for health maintenance organizations are rising as fast as costs for less-managed preferred provider plans; a number of employers are dropping retiree medical plans; and prescription drug costs have abated slightly as employers redesign benefits.
Health benefit costs have been rising faster than inflation for the past four years, the Mercer study notes. But while unemployment was low and profits high, employers moved slowly, if at all, to share increases with employees. While the average dollar amount that employees contribute to the cost of coverage (through payroll deductions) has risen over the past few years, the percentage they pay has not -- meaning that employers have been absorbing the lion's share of cost increases. Deductible and copayment amounts have remained relatively flat as well.
But at the end of 2000, with the economy slowing down, the smaller, more vulnerable employers took steps to shift more costs to employees in 2001.
Although there was no significant cost shifting among large employers in 2001, it's clearly on the way, says the study. Responding to the survey in the summer of 2001, 40 percent of large employers said they would require employees to pay a higher percentage of total cost in the upcoming year. Over a third said they would raise deductibles, copayments, or out-of-pocket maximums.
Blaine Bos, a consultant with Mercer and one of the study's authors, says there are no realistic expectations that the double-digit trend will abate over the next few years -- "not with all those aging baby boomers still working. Unless a new silver bullet materializes -- like managed care in the 90s -- this rising tide may become a full-fledged flood."
The Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans is the largest and most comprehensive annual survey of its kind, with over 2,800 respondents in 2001, Mercer says. Mercer used a national probability sample of public and private employers and weighted the results to reflect the demographics of all employers in the U.S. with 10 or more employees that offer health coverage. Therefore, the survey results represent about 600,000 employers and over 90 million full- and part-time employees, it says.
http://www.bayeconfor.org/pdf/HealthCareEmployerMandatesJan25.pdf
