Survey: Employer health benefit costs up 6.9 percent in 2011

Health benefit costs for employers will rise about 6.9 percent this year after plan changes and about 6.4 percent next year, according to a major employer survey released this week.

Mercer's National Survey of Employer-Sponsored Health Plans shows employers were facing 10 percent overall cost increases without plan changes, with health care reform requirements add 1 percent to 2 percent to the cost. The employers surveyed hope to hold increases to an average of 6.4 percent by changing insurers, restructuring their benefits, or both.

This year's 6.9 percent increase was higher than last year's 5.5 percent increase, the survey found.

” Employers did a little bit of everything to hold down cost increases in 2010,” said Tom Hoffman, a principal in Mercer's Cedar Rapids office.

Hoffman said the average deductible on a preferred provider organization plan was increased by about $100. Employers dropped HMO (health maintenance organization) plans, and large employers added low-const consumer-directed health plans, encouraging more employees to enroll in them, and in some cases dropping all other options.

Larger employers saw sharper cost increases than smaller employers in 2010, with costs rising by 8.5 percent among employers with 500 or more employees and just 4.4 percent among those with 10-499 employees.

Hoffman said large employers may have been taken by surprise by the uptick in cost increases this year, since they predicted last year that their 2010 costs would rise by less than 6 percent.

While higher prices for health care services are clearly part of the equation, Hoffman said it's possible the recession slowed down utilization of health care services last year, and more employees are getting care they'd postponed.

The survey of employers with 10 ore more employees was conducted in late summer. More than 2,800 employers responded. The error range was plus or minus 3 percent.