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Health Insurance Cost Tipping Point Inches Closer

Les Masterson, for HealthLeaders Media, October 14, 2009

In the September issue of HealthLeaders magazine, I asked industry leaders a simple question: Have we reached a point at which the insured will drop coverage in great numbers because they simply can't afford it or find it's not worth the costs?

As you would expect, there was disagreement about whether we have reached that tipping point, but everyone agreed that if we're not there yet, we're close.

Well, that tipping point will inch a little closer in 2010.

Towers Perrin released its annual Health Care Cost Survey last week that predicted that employees of large businesses will pay 10% more for health coverage in 2010. It said the average employee premium contributions increased by more than $200 next year.

The Towers Perrin 2010 survey is especially noteworthy because it features 300 of the nation's larger employers, representing a workforce of 5.2 million employees and their dependents. These figures don't count the mid-sized and small businesses that are struggling between the choice of health coverage or layoffs. That 10% figure would likely be even higher for smaller businesses.

Don't expect consumer health costs to decrease any time soon either, especially with Towers Perrin's statement that only 11% of large companies surveyed are willing to "absorb higher healthcare costs by accepting reduced profits." In other words, 89% of large employers will need to either pass more costs onto employees or reduce benefits.

The report did find that more large businesses are placing more control (and costs) onto employees through account-based health plans, also known as consumer-directed health plans. Large employers have found account-based plans cost 13% less than the traditional health plan, partly because of a higher share of the costs to the employees.

Over the next few years, health plans and businesses will increasingly link a member's premium cost levels to participating in wellness programs and completing health risk assessments, Michael Fiaschetti, market president for Pennsylvania central region at Highmark Inc., the Pittsburgh-based health insurer of Blues plans, told me.

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