Health Care Plan Costs Up 7.1%
Massachusetts employers saw the cost of their health benefits increase by 7.1 percent and many will respond by increasing their employees’ share of the burden, according to the Mercer 2008 National Survey of Employer-Sponsored Health Plans.
The survey found that Massachusetts employers paid an average of $10,242 per employee, a 7.1 percent increase compared to 2007, for health insurance coverage this year. Respondents said that if they had made no changes to their plans in response to rising costs, their increases would’ve been nearly 9 percent.
Employers also told Mercer that making changes to the structure of their plan or changing plans or vendors could cut the average increase to 6.3 percent.
Copay Creep
Mercer said 40 percent of survey respondents intend to increase employees’ share of premium contributions in 2009.
The survey found that 50 percent of all Massachusetts employees covered in employer health plans were enrolled in HMOs. The average monthly employee health insurance plan contribution was $95 in 2008.
The increase Massachusetts companies and employees dealt with in 2008 outstripped the total national increase of 6.1 percent.
According to Mercer’s research, health care cost increases have held steady for the past three years after spiking by almost 15 percent nationally in 2002. But while Mercer points to health care costs’ recent relative stability as “the good news,” it also notes that costs are still rising at twice the rate of inflation.
Since 2001, rising health care costs have outpaced both workers’ earnings and consumer prices and have been “eroding business profitability,” said Mercer.
That erosion has been particularly drastic for small businesses, but small businesses in Massachusetts, with its requirement that all its residents carry some form of health insurance, may not be affected quite so drastically. Mercer said small businesses in states without “a mandate to provide coverage” were simply dropping their health insurance plans. Among employers with fewer than 200 employees, health coverage prevalence fell from 63 percent to 61 percent in 2007, Mercer said.
Mercer is an international human resources consulting firm with offices in Boston and Norwood. The company is a wholly owned subsidiary of Marsh & McLennan Cos. Inc.
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