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Mercer: U.S. health benefit costs increased by 6.9 percent


Growth in the average U.S. health benefit cost per employee, which had slowed last year to 5.5 percent, increased by 6.9 percent to more than $9,500 this year, according to the National Survey of Employer-Sponsored Health Plans.

Among Iowa employers, the 2010 increase was 7.9 percent, rising to an average of $8,945 per employee. The survey, conducted annually by Mercer, indicated that health benefit costs increased three times faster than the rate of inflation in 2010.

Employers expect large cost increases again in 2011. They predicted that costs would rise by about 10 percent if they made no health program changes, with roughly 2 percentage points of this increase coming solely from changes mandated by the Patient Protection and Affordable Care Act.

However, employers expect to hold their actual cost increase to 6.4 percent by making changes to plan design or changing plan vendors. Mercer’s survey included public and private organizations with 10 or more employees; 2,836 employers responded in 2010.

Among Iowa employers that responded to the survey:

  • 34 percent said they will shift costs to their employees next year by raising deductibles, co-pays or out-of-pocket maximums. Additionally, 28 percent said they will increase employees’ share of premium contributions, and 18 percent will increase employee cost sharing in some other way.
  • 14 percent offered a consumer-directed health plan with an account feature (health reimbursement account or health savings account) in 2010.

“Employers did a little bit of everything to hold down cost increases in 2010,” said Jim Green, Mercer’s office leader in Urbandale. “The average individual PPO (preferred provider organization) deductible rose by about $100. Employers dropped HMOs (health maintenance organizations), which were more costly than PPOs this year.”

Large employers added low-cost consumer-directed health plans and found ways to encourage more employees to enroll in them, sometimes dropping all other plan options, Green said. Additionally, more companies provided employees with financial incentives to take better care of their health.

Wellmark Blue Cross and Blue Shield, which earlier this month requested a 10.9 percent increase in individual premiums for next year, declined to provide figures on its average group health plan premium increases.

“We’re not trying to be difficult, but we don’t necessarily want our competitors to have access to that information,” Rob Schweers, a Wellmark spokesman, wrote in an e-mail.

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