Mercer Survey: Employers See Small Premium Hikes in 2011

Insuring Resources Comnmentary:
Premium increases over the last decade or so have averaged 8% so this appears to be very good news for many employers. We'll see what the projections look like later this year.

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Survey: Employers see small health care hikes in 2011

(AP) – May 20, 2010

NEW YORK — More than 40 percent of employers surveyed by the consulting firm Mercer expect health care reform to raise health care costs by a modest 2 percent or less next year.

A quarter of those surveyed believe reform will add at least 3 percent to their projected costs for 2011, while 3 percent of the employers expect no increase.

Benefit plans may see additional costs next year due to provisions in the reform law that ban lifetime maximums for benefits and extend coverage of young adult dependents on parental plans to age 26.

Mercer said Thursday the actual impact will vary widely by company, depending in part on the employees it covers. For instance, it may be fairly small for a company with a young employee population that has few dependents who would qualify for that coverage extension.

About 71 percent of large employers have a lifetime maximum for benefits while 29 percent don't, said Beth Umland, Mercer's research director for health and benefits. Those that don't won't need to make an adjustment for next year.

Average health benefit costs per employee have risen about 6 percent each year for the past five years, Mercer said. Any increases from reform will be in addition to that.

"They have to work hard to keep it at 6 but throw on another two points, it will be interesting to see how they chip away at that," Umland said.

Companies often raise co-insurance, deductibles or other employee contributions to tame their cost increases.

A total of 791 employers responded to Mercer's online survey. They represented several industries including retail, manufacturing, health care and financial services.