It sounds so sweet: Reports say, healthcare cost inflation is diminishing. Are they too good to be true?
First impressions are it may actually be true. Two completely independent studies have come to the same conclusion: The amount employers will pay for health insurance coverage in 2012 will increase between 5% and 6% on average.
That projected cost increase could be the smallest recorded in 15 years.
The first study
A Mercer study, which interviewed about 1,600 employers, says health insurance costs will rise 5.4% on average.
Two contributing factors the study lists for the reduction in premium increases:
- many employers plan to trim back their plans and shift more costs to employees, and
- healthcare utilization has decreased.
Some analysts at Mercer believe the decrease in utilization is the result of higher deductibles and the economy causing employees to have less disposable income to spend on care.
Others say it could a sign that wellness programs are beginning to pay off — by keeping employees healthier and in less need of urgent care.
Some plan changes employers said they’re more likely to make next year:
- 36% said increasing employee contributions for dependent coverage
- 33% said increasing contributions for employee-only coverage, and
- switching over to a consumer-driven health plan (CDHP) — usage of these plans is expected to increase to 18% and 58% for small and large employers respectively (an increase from 14% and 51% in 2010).
The employers interviewed said their insurance costs would increase about 7.1% next year if they didn’t touch their plans — still a significant decrease from past years.
The second study
A Towers Watson survey of 368 employers found that health insurance costs are expected to increase 5.9% on average in 2012 — a significant decrease from the 7.6% increase those same employers endured in 2011.
But again, that decrease won’t come without sacrifice.
Some changes employers said they’ll make in 2012
- 46% will increase employees’ share of premium contributions for employee-only coverage between 1% and 5%
- 44% will increase employees’ premiums for dependent coverage between 1% and 5%
- 20% will increase employees’ premiums for employee-only coverage 5% or more, and
- 29% will increase employees’ premiums for dependent coverage between 5% or more.
Are these surveys an accurate reflection of what you’re seeing? Are you expecting a similar decrease in cost increases/benefits? Let us know in the Reply box below.