Health Insurance Costs Increase for Smaller Firms, Study Finds
Increases in health benefit costs for small- and medium-sized employers decelerated last year, with the slowdown representing "a reprieve from higher rates, not an end to them," according to a survey released Tuesday by benefits consulting firm Marsh, the Boston Globe reports. The Marsh survey found that for employers with fewer than 2,000 workers, health insurance premiums increased 9.8% in 2003, down from 18.4% in 2002. Companies expect premiums to increase an average of 14% in 2004, according to the survey of about 1,900 employers nationwide. In the future, nearly 50% of the employers with between 1,000 and 1,999 workers plan to increase the amount employees contribute toward health insurance premiums, and 43% plan to increase out-of-pocket deductibles and copayments, according to the survey.
With employer health costs increasing, companies are "going to pass on more to their employees. That's the only way they can survive," Bernard Walsh, the head of Marsh's New England employee benefits group, said. According to the survey, more than 33% of medium-sized firms that offer preferred provider plans now have deductibles of $1,000 or more. Walsh said that in early 2000 many deductibles with a PPO plan were as low as about $250 but in the last "two to three years, a lot of companies started increasing it to $1,000. At first it was shock. Now it's becoming more the norm." The survey also found that most employers use a three-tiered system for drug copays, with workers contributing $11 on average for generics, $22 on average for name brands and $38 on average for the most expensive name brands (Blanton, Boston Globe, 7/7).