Employers Consider Cost-Sharing Options
Rising health costs and a slowing economy are leading employers to consider passing more health insurance costs on to employees, USA Today reports. According to benefit management firms, the following are some of the changes being discussed:
According to Paul Ginsburg of the Center for Studying Health System Change, giving employees options to reduce costs is preferable than uniform cost-cutting measures. "(Employers) can either limit choice and avoid cost-sharing or workers can pay more to have more choice. That is potentially more acceptable," he said (Appleby, USA Today, 4/5).
A second USA Today article reports that lifetime caps on payments by health insurers may affect more Americans in the near future as the rising cost of treatments combined with their effectiveness in prolonging life leaves many individuals with health care bills amounting to millions of dollars. While currently 80% of employer-sponsored health plans have lifetime caps -- typically around $1 million -- only 2,500 people a year reach that limit, according to a PriceWaterhouse estimate. However, the caps in this price range were set by insurers "several decades ago," and could become inadequate as the cost of treatment rises. For instance, a $1 million cap established in 1970 is the equivalent of $12.5 million in inflation-adjusted dollars, USA Today reports. In recent years, many employers have taken steps to increase their caps. For example, FedEx last year doubled its limit to $2 million. Rep. Anna Eshoo (D-Calif.) said she plans to introduce a bill that would mandate lifetime caps of $5 million by next year and $10 million by 2004. However, employers and insurers are generally opposed to price floors on lifetime caps for fear of "open-ended exposure to financial risk" (Appleby, USA Today, 4/5).