Faced with rising health costs, large employers plan to shift burden to workers

Faced with skyrocketing healthcare costs and new insurance rules under healthcare reform, more of the nation's biggest businesses are planning to hike premiums and cost-sharing measures on their employees next year, according to a survey of those companies released Wednesday.

Seventy percent of large employers said they will eliminate lifetime dollar caps on overall benefits, according to the latest annual survey conducted by the National Business Group on Health (NBGH), while 63 percent plan to increase premium rates in 2011, up from 57 percent this year. 

Forty-six percent intend to hike maximum out-of-pocket costs for workers next year, up from 36 percent in 2010. Forty-four percent intend to increase in-network deductibles.

An additional 5 percent plan to drop retiree healthcare coverage in 2011, while another 60 percent are eyeing that strategy for the future, the survey found. That trend, NBGH said, is based on healthcare reform's gradual move to close the doughnut hole in Medicare's prescription drug benefit — a provision "making Medicare Part D benefits richer," the group said.

Business leaders say the benefit changes are necessary to keep companies profitable in the face of skyrocketing healthcare costs. Indeed, the surveyed companies expect their health benefit costs to jump an average of 8.9 percent in 2011, versus 7 percent this year.

"While the health reform law has forced employers to evaluate their health care benefit strategies and decide whether to comply with the law or lose grandfathered status, they haven’t lost sight of the fact that controlling rising costs remains one of, if not, their highest priority," NBGH President Helen Darling said in a statement. "They have to foot the bill, not the government." 

"With cost increases expected to accelerate next year," Darling added, "many of the plan design changes employers are making are being done to help curb those increases, as they have to do every year."

The findings are sure to fuel the debate over the reform law's effects on healthcare costs, as the Obama administration continues to tout the consumer benefits surrounding the insurance reforms, and conservative critics continue to blast the changes as a burdensome intrusion into private insurance markets.

Among the other key findings: 

• Twenty-five percent of large businesses plan to hike the co-pay or co-insurance costs for prescription drug benefits at retail pharmacies, while 21 percent have the same plan for mail-order pharmacy benefits.

• Twenty-six percent will remove annual caps on overall benefits.

• Thirty-seven percent plan to alter annual or lifetime limits on specific benefits, including dental, mental health and infertility benefits. 

• Thirteen percent said they will eliminate pre-existing condition exclusions for youngsters. 

The numbers were based on responses from 72 large employers representing more than 3.7 million employees, NBGH said. The survey was conducted in May and June of this year.