Health insurance costs plateau

By Joyzelle Davis, Rocky Mountain News (Contact)

Published November 19, 2007 at 12:05 a.m.

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Health insurance nationwide increased 6.1 percent this year, to an average of $7,983 per worker, the same pace as the past three years, according to a study released today by Mercer Human Resource Consulting.

The plateau comes after health care costs soared by nearly 15 percent in 2002, and employers expect increases to slow to 5.7 percent next year, the Mercer study said. Still, this year's health care cost increase is twice the rate of inflation.

Large employers are tempering cost increases in part by asking employees to shoulder higher deductibles, while smaller employers continue to stop offering health coverage altogether. Among employers with 500 or more workers, the average in-network preferred provider organization, or PPO, deductible rose by 11 percent, from $426 to $473 for individuals and from $1,022 to $1,134 for families.

"Given that the majority of covered employees are in PPOs, an increase in deductibles of this size could dampen employers' total health cost increase by about a point," said Chris Watts, markets business leader for Mercer's Denver health and benefits consulting office.

Among employers with fewer than 200 employees, 61 percent offered health coverage in 2007, down from 66 percent five years ago. On top of that, more than a fifth of small employers that provide health care don't subsidize family coverage at all.

In spite of that trend, small employers are reluctant to take up Health Savings Accounts and Health Reimbursement Accounts, which are the medical plans with the lowest cost by far, the study found. Such plans are most common at the largest employers, where they're typically offered as an option alongside other medical plan choices.

Mercer's survey is based on the responses of 3,000 participants.

In Colorado

6.8% Total health insurance benefit cost increase for active employees in 2007, to an average of $7,985

5.1% Total health benefit cost increase employers expect for 2008

$65 Average monthly contribution by an employee for individual coverage in a PPO

$54 Average monthly contribution by an employee for individual coverage in an HMO

* 51 percent of employees covered by employer plans were enrolled in PPOs, 30 percent in HMOs and 8 percent in POS plans.

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