A growing number of workers in 2009 will pay more for health benefits -- and in some cases receive less coverage -- as their employers grapple with the financial fallout of rising medical expenses and diminished revenue and profits, recent surveys of human resource officials show.
The Corporate Executive Board found in its survey that a quarter of officials from 350 large corporations said they had increased deductibles an average of 9% in 2008. But 30% of the employers said they expected to raise deductibles an average of 14% in 2009. Mercer, a global benefits consulting firm, surveyed nearly 2,000 large corporations in a representative poll and found that 44% planned to increase employee-paid portion of premiums in 2009, compared with 40% in 2008.
The economic slowdown, according to analysts, is making it more difficult for many employers to subsidize healthcare costs at previous levels. On average, experts say, benefit packages contain the biggest increases for workers since the recession of 2001. Workers’ health costs are rising much faster than wages.
The cost-shifting is one more piece of bad news battering consumers, analysts said. The plummeting stock market has crushed retirement funds. Many companies, including Sears Holdings Corp., Starbucks Corp., FedEx Corp. and General Motors Corp., have stopped matching workers’ 401(k) contributions.
To cut costs, employers increasingly are introducing high-deductible “health savings accounts” and focusing on wellness programs aimed at keeping workers healthy through diet and exercise.
Ten years ago, employers on average paid about 90% of their workers’ health costs, said Shub Debgupta, senior director of the Benefits Roundtable at the Corporate Executive Board. That is down to 73%, Debgupta said, and is expected to hit 70% in the next few years.
Children’s Hospital and Research Center Oakland, which had charged workers nothing for health insurance, this year is requiring nonunion employees to pay as much as $225 a month for dependents and is raising deductibles by $100, a spokeswoman said. The hospital is losing millions of dollars on public-assistance patients whose care is not fully reimbursed by the U.S. government.
Some small businesses, which lack financial reserves to offset revenue losses and have fewer workers to spread the insurance risk, are shifting even more to employees.
Premiums for employer-sponsored plans over a decade on average have risen to $12,680 a year from $5,791, according to the Henry J. Kaiser Family Foundation. The median deductible for the plans was $1,000 in 2008, compared with $500 from 2001 to 2007, according to a survey of 2,900 employers conducted by Mercer.