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CCH® BENEFITS — 06/11/09

Public Employers Respond To Financial “Crisis,” Rising Health Care Costs By Raising Employee Cost Sharing, Premiums

from Spencer’s Benefits Reports: Nearly three-fourths of public employers are increasing or considering increasing their employees’ cost sharing for health insurance, according to a recent survey conducted by the International Foundation of Employee Benefit Plans (IFEBP). The survey found that public employers are increasing or considering an increase in their employees’ deductibles, coinsurance, or copayments (72% of employers).and premiums (74%). Other cost-containment measures also are being considered. Public employers blame the financial crisis and rising health care costs for the health care plan adjustments (about 45% of survey respondents).

“These findings are surprising, although cost-sharing measures have been common in the corporate world for quite some time, public employers have traditionally not modified their health care plans in this direction,” said Sally Natchek, senior director of research at the IFEBP. “The fact that the majority of public employers are now increasing deductibles, copayments, and premiums illustrates the dual effect rising health care costs and the financial crisis are having on their plans.”

Other cost-saving programs that public employers are instituting include adding a consumer-driven health plan (CDHP) (31%), shifting to self funding (26%), and introducing spousal surcharges (20%). Public employers seem to be overcoming previous skepticism of CDHPs in order to save money.

Prescription drug costs are another major target of public employers’ cost-containment efforts: 72% are focusing on these costs, with most (74%) expanding participant education about drug options and costs, followed by 61% increasing drug copayments and/or coinsurance for drugs and 54% mandating use of generic drugs (54%). Nearly one-fourth of public employers emphasized that they are taking these measures specifically because of the financial crisis.

The survey, Health Care Plans: Impact of the Financial Crisis (Item #6696E), is available for purchase by non-IFEBP members at www.ifebp.org/books.asp?6696E.

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