Las Vegas Business Press :: News : Open enrollment sees employers passing along higher health care costs to workers

Open enrollment sees employers passing along higher health care costs to workers

Many companies opt to lower benefit packages as way of saving costs

BY TIM O'REILEY

The health insurance choices companies are submitting to employees during the open enrollment period now under way largely follow what they have done in the recent past.

As companies struggle to keep their health care bills from rising out of proportion to other expenses, many have resorted to raising co-payments or deductibles and trimming some types of coverages. Some companies have raised premiums. More also promoted high-deductible policies mated with medical savings accounts, termed consumer-driven health plans, although industry officials debate their impact.

"The overarching theme in place for at least several years has continued, which is to ensure shared responsibility for health care costs between employers and employees," said Kirby Bosley, the Los Angeles-based western division practice leader for group and healthcare for the consulting firm Watson Wyatt Worldwide.

PHOTO BY MIKE STOTTS | BUSINESS PRESS
Nicole Jones-Gyllstrom, president and business market leader at the Las Vegas office of the consulting firm Mercer, says consumer-driven plans with higher deductibles are catching on.

Don Giancursio, senior vice president of UnitedHealthcare of Nevada, the state's largest insurer, which operates under several brands, added: "From what we have seen, there have been no radical changes one way or the other."

The general approach of altering some terms is often called "tweaking" by those in the industry -- they are called "higher bills" by employees who must pay them. By Anthem Blue Cross and Blue Shield of Nevada's estimate, employers have been "buying down" the value of benefits by close to 5 percent. That has often been the alternative to raising the premiums on employees and having the companies pay more.

"The number one thing we have seen among our clients is lowering the benefit packages," said John Egermayer, senior vice president of KIA Insurance. "It is a cost-effective way for employers to manage their health-care costs."

Beyond that, companies have taken to shopping around. A nationwide survey by the consulting firm Mercer shows that 67 percent of companies put their coverage out to bid this year instead of just renewing with their incumbent carrier, a figure that normally runs about 50 percent. The result was that 25 percent switched, about 10 percentage points higher than usual.

"A lot of companies are in the cost-cutting mode," said Nicole Jones-Gyllstrom, president and business market leader at the Las Vegas office of the consulting firm Mercer. "There is a lot of changing going on."

The local numbers, she added, almost exactly mirror national ones.

Estimates of how much costs have risen this year vary from 5 percent according to a survey by the Kaiser Family Foundation, to 9.9 percent according to PricewaterhouseCoopers. Others show the number as slightly higher.

Kaiser put this year's average annual premium at $4,704 for single coverage and $12,680 for a family, with companies absorbing close to three-fourths of them.

However, the consumer-driven plans that lower the costs for employers still meet with mixed reception. Mike Murphy, president of Anthem-Nevada, said about 15 percent to 20 percent of the people his company insures are now in the plans, with 10 percent to 15 percent of new customers opting for them. That has been driven at least partly, he said, by more employers willing to contribute to employee accounts for taking steps such as health risk assessments and improving databases to allow patients to shop for doctors and hospitals.

"I actually think they are catching on," said Jones-Gyllstrom, as employees become more comfortable with deductibles much higher than traditional plans.

Egermayer sees them gaining acceptance only among a few segments, however, such as with closely held or family-owned businesses and professional firms such as accountants or attorneys.

"We get a lot of requests about them but see very little adoption, very little traction," UnitedHealthcare's Giancursio said.

Just more than half of UnitedHealthcare's customers in Nevada have stayed with traditional HMOs, he added.

As the economy has deteriorated, the industry experts say the number of people enrolling for health coverage has dropped, even within companies. The trend is expected to continue or accelerate.

"2009 is going to be a tough year, no question," Giancursio said.

Contact reporter Tim O'Reiley at toreiley @lvbusinesspress.com or 702-387-5290.

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