Businesses budgeting 7% increase for health care in 2013

Jack Keough


Large businesses are expecting health care costs to rise another 7% next year, almost three times the expected inflation rate, according to a survey by the National Business Group on Health, a non-profit association of 342 large employers.


If that forecast proves correct, it will be the third consecutive year of about 7% increases. The news for employees is that a majority of employers indicate they plan to pass along a portion of the increase along in higher premiums in the range of 5%.


In addition, the survey shows that large employers are eyeing a variety of cost control measures by sharply boosting financial rewards to help workers engage in healthier lifestyles.  The survey also reveals that employers are continuing to make adjustments to their plans to comply with additional provisions of the new health care reform law.


Despite being able to “hold the line” on increases, six in ten employers (60%) plan to increase the percentage of the premium paid by employees in 2013. Additionally, 40% plan to increase in-network deductibles while roughly one-third will increase out-of-network deductibles (33%) and out-of pocket maximums (32%). The survey, based on responses from 82 of the nation’s largest corporations, was conducted in June 2012 prior to the Supreme Court’s announcement to uphold the health care reform law.


“Rising health care costs continue to plague employers at an alarming rate,” said Helen Darling, president and CEO of the National Business Group on Health. “Although cost increases have stabilized somewhat, they are still on a higher base from last year and are simply not sustainable, especially when our nation’s economy and workers’ wages are virtually flat and everybody is struggling.”


Respondents were asked what changes they made or are planning to make as regulations from the Affordable Care Act continue to come into effect. The survey results showed:


  • Annual Benefit Limits: Half of all respondents (50%) indicated they no longer have any annual benefit limits in place, while nearly one third (32%) reported that they did not make any changes to their annual limits this year.
  • Health Insurance Exchanges: More than half of respondents (51%) believe that some retirees might find state health insurance exchanges to be a viable option for health insurance. More than one-third (38%) felt that COBRA plan participants might consider exchanges, while 35% felt that part-time employees might consider exchanges.


That report comes on the heels of a separate report by Price Waterhouse Coopers which forecasts a 7.5% increase in health costs.


But PwC’s Health Research Institute, which based its research on input from health plan actuaries, industry leaders, analyst reports and employer surveys, said data for the past three years suggest an extended slowdown in healthcare inflation from earlier decades when annual costs rose by double-digits.


“We’re in the early beginnings of a shift toward consumerism in healthcare. And we think that you’ll see more of that in the coming months and years,” said Ceci Connolly, the health institute’s managing director.


More than half of the 1,400 employers surveyed by the firm are considering increasing their employees’ share of health benefit costs and expanding health and wellness programs in 2013, according to the report.



Jack Keough was the editor of Industrial Distribution magazine for more than 26 years. He often speaks at many industry events and seminars. He can be reached at john.keough@comcast.net or keoughbiz@gmail.com

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