Employer Health Insurance Cost To Grow In 2009

U.S. residents enrolled in employer-sponsored health plans will contribute an average of 41% of their health care costs in 2009, the largest share to date, according to a study released on Monday by the Seattle-based actuarial consulting firm Milliman, the Minneapolis Star Tribune reports. The report looked at employer-sponsored preferred provider organizations plans in 14 metropolitan cities.

Researchers found that total medical costs for a typical family of four in 2009 are expected to reach $16,771, up by 7.4% from 2008. Employers are expected to pay $9,947 of that, and employees are expected to contribute $4,004 through health plan premiums and another $2,820 through out-of-pocket costs such as copayments and deductibles. In addition, the report found that consumption of medical services is expected to be flat this year for the first time ever. Kate Fitch, a consultant at Milliman, attributed the slowdown to better disease management and wellness programs. However, per unit medical costs are up, and hospital outpatient care had the highest growth in 2009 (Yee, Minneapolis Star Tribune, 5/18).

The report also found variations in medical costs by city. Miami had the highest health costs for a family of four at an average of $20,282 in 2008, almost 21% higher than the national average, followed by New York City at $19,684. Phoenix had the lowest at $14,857 (Dorschner, Miami Herald, 5/19).

Key MMI health insurance findings include:

* The total 2009 medical cost for a typical American family of four is $16,771, compared with the 2008 figure of $15,609. This is a 7.4% increase from 2008 to 2009.

* This is the third straight year of decreasing cost trends. Even so, the $1,162 increase is the highest since the 2006 increase of $1,169, when cost trends were at 9.6%.

* Every category of costs except inpatient and outpatient facility care experienced lower cost trends than last year.

* This is the third consecutive double-digit percentage increase in the amount that employees spend for healthcare services. This is primarily due to increased employee contributions, as out-of-pocket cost-sharing trends were more modest.

* The current economic environment has significant implications for healthcare costs. The consequences of employers' lost business, consumer insecurity, and provider revenue pressures affect healthcare utilization, charges for healthcare services, and who pays for the healthcare. The unprecedented uncertainty has accelerated cost increases in some ways and at the same time has reduced certain categories of utilization (e.g., elective procedures).

The report is available online at Milliman.

Used with permission from Kaisernetwork.