Health care use slows premium hikes

Benifitspro reports:

“Many workers will see their health insurance costs rise less next year than in more than a decade, partly because consumers are dialing back their health care use, a benefits consultant has found.

A survey from consultant Mercer of companies that offer employees health insurance shows the cost will rise an average of 5.4 percent in 2012. That compares with an average hike of 6.4 percent this year and it would be the smallest increase since 1997, according to data Mercer released Wednesday.

Employers say their health insurance costs would rise about 7 percent next year if they made no changes to the plans they offer; health care costs overall are continuing to rise much faster than inflation. But employers told Mercer they expect to whittle the increase workers see by taking such measures as raising deductibles or co-payments and switching insurers.

Some workers may see smaller or larger hikes than this average. Companies can eat a portion or all of a cost increase for their workers, but they also may ask workers to increase their share of the total bill they split with the employer for coverage. About a third of the employers Mercer surveyed plan to increase the portion their workers pay next year.

Employer-sponsored health insurance is the main form of health coverage in the United States, and many workers are about to receive notices from their companies about their benefits plans for next year.

Insurers have been saying for months that health care use has grown more slowly this year, and many industry observers pin this on the sluggish economy.

Employers also have played a role in containing health care costs, according to Beth Umland, Mercer’s health and benefits research director. For several years, companies have been increasing employee cost-sharing in their plans, which means they ask people to pay more at the doctor’s office or a higher percentage of the bill for care. This exposes people more to the cost of care.

“That, combined with the bad economy, is kind of making employees think twice about non-urgent care,” she said.

Insurers and employers base their rates for health insurance in part on the price of care and how often people use it, Umland said. If the use of care is rising at a slower rate, they may be able to tone down insurance cost increases.

Slower insurance growth rates deliver only a limited dose of good news. Health care costs are still climbing about three times faster than general inflation, noted Bob Laszewski, a consultant and former insurance executive who was not involved with the study.

“We still have health care costs far outstripping wages and growth in the economy,” he said.”