California Survey Finds 16% Increase So Far This Year : Medical Benefits Cost to Employers Still Rising
Despite intensive cost-containment efforts, California employers are paying 16% more for workers’ medical benefits this year than in 1984, according to a new survey.
But the increase was significantly less than the 22% jump in 1984, the study noted. The survey was conducted by McGinn Associates, an Anaheim-based health benefits consulting firm.
Nevertheless, most employers are attacking rising costs by cutting health-care benefits to their workers. During the past year, 32% of the companies surveyed reduced employee benefits while only 13% increased them, the study found.
“There has been a continuing shift” in health-care costs from employers to their workers during the past three years, the survey reported. The study was based on responses from 95 California employers who employ about 306,000 workers.
Its findings closely mirror the employer health-care cost increases being felt by companies nationwide, according to the U.S. Chamber of Commerce. Employer contributions for workers’ health-care benefits jumped 19% to an estimated $82 billion between 1982 and 1983, but those contributions are expected to creep ahead only 11% this year to about $101 billion, according to the Chamber, a Washington-based lobby for business.
To combat rising health-care costs, 77% of the employers in the California survey have either joined preferred provider organizations (PPOs) or have established utilization-review programs, the report found.
PPOs are organizations that rate doctors and hospitals and negotiate discount medical rates in return for quick payment and a large share of the companies’ business. Utilization review programs monitor employee benefit claims to guard against waste and excessive use of benefits.
Health maintenance organizations (HMOs), a prepaid form of health insurance touted as a way to cut medical costs, are also popular. In a recent survey of 1,250 employee benefit managers conducted for Equitable Life Assurance Society, 49% said HMOs were effective in containing costs while 38% said HMOs were not effective.
A poll released by the Louis Harris organization last June found little worker resistance to such cost-containment approaches.
Echoing a number of previous polls, the Harris survey found that workers are generally indifferent to cuts, except those that actually cost them money out of pocket--such as increased deductibles and co-payment plans in which employees must share out-of-pocket expenditures.
But, having exhausted the painless cost-containment measures, many employers are forcing their employees to pay more. For example, only 42% of the respondents to the survey now have medical deductibles of as little as $100, down from 70% of respondents in 1983. Some 38% of the employers now require deductibles of $150 or more, up from 6% in 1982.
