- The Washington Times - Thursday, November 16, 2006

While shoppers tally their holiday gift lists, many U.S. companies are confronting tough decisions about how much to spend on employees’ health care next year.

November is the time employers choose the types of health plans for their employees for the coming year.

After seeing health care costs increase by 60 percent in the past six years, most companies are gearing those plans toward a larger employee contribution.

But because monthly health care costs for U.S. employers are projected to increase only 6 percent in 2007 — down from 7 percent last year — employee contributions to health care are likely to remain steady.

“This is good news,” said Helen Darling, president of the National Business Group on Health.

But that bit of good news was eclipsed when the health insurance industry reminded everyone — especially members of the now Democratic-controlled Congress — that 46.6 million Americans have no health coverage.

The industry has put forth a complicated proposal of tax breaks and large state cash grants that, if successful, would eventually free the United States of the distinction of being the only industrialized country in the world not to offer some type of national health plan.

“The protracted rise in health costs is eating into company profit margins and employee wage increases, and taking significant dollars away from benefit and reward programs, said Ron Fontanetta of the benefits-consulting firm Towers Perrin.

“We estimate that, in every year for the last five years, about 1 percent of wage increases has gone to health care costs.”

Ms. Darling points out that with health care expenses steadily increasing, nearly one-fifth of a 4 percent raise on a $40,000 annual salary would be used toward paying for increased premiums.

“The bad news is wages are not rising as fast as health care costs,” she said.

While Detroit-based automakers General Motors Corp., Ford Motor Co. and DaimlerChrysler AG’s Chrysler Group sat down with President Bush and Vice President Dick Cheney on Tuesday to talk about the fact that health care costs are outpacing the cost of steel and ways to curb those costs, most employers are going to have to figure it out on their own.

One way is to make health care costs more visible to the employee. A growing trend among employers is to substitute coinsurance payments for the more traditional copayments. A coinsurance payment is a percentage of the cost of a hospital or doctor’s visit, rather than a flat copay.

The consequences of continuing on the current path could add even more problems.

A study by Yale University School of Medicine professor Patricia Keenan warns that employer-sponsored coverage may be facing dire circumstances.

The study finds that the only people willing to retain employer-based coverage, as monthly premium payments continue to rise, will be the wealthy and old. Without young and healthy people, the insurance company takes on a greater risk.

“As the baby boom generation approaches retirement, population aging, combined with declines from rising premiums could further destabilize the employment-based system,” said Ms. Keenan.

Health Care runs Fridays. Call Gregory Lopes at 202/636-4892 or e-mail [email protected]washingtontimes.com.


Copyright © 2018 The Washington Times, LLC. Click here for reprint permission.

The Washington Times Comment Policy

The Washington Times welcomes your comments on Spot.im, our third-party provider. Please read our Comment Policy before commenting.

 

Click to Read More and View Comments

Click to Hide