Employers hold line on health costs

By Julie Appleby, USA TODAY

The hot economy and a tight labor market kept most employers from making workers pay more for health insurance this year.

Employers are expected to hold the line again next year, even though companies will pay an average of 7.5% more to insurers, the third straight year of significant increases.

Despite those higher costs, only 25 % of employers plan to ask workers next year to pay more in monthly contributions, annual deductibles or office visit payments, according to a survey released Monday by benefits firm William Mercer.

"As long as we have a booming economy and not enough people to go around, employers are going to be loath to pass on costs to employees," Blaine Bos of Mercer says.

The survey of 3,166 companies found:

Insurance premiums rose an average 7.3% in 1999, nearly three times the rate of inflation, to $4,097 per employee.

Workers' contributions to their insurance coverage actually dropped, from 24% of the total premium for an HMO plan in 1998 to 20% in 1999. The average worker paid $37 a month toward HMO coverage in 1998 and $32 this year. Family coverage fell from $138 a month for an HMO in 1998 to $124 in 1999.

An increasing percentage of companies offered dental and vision insurance.

Enrollment in health maintenance organization plans, the most restrictive type of managed care, remained flat. It trailed that of preferred-provider organizations, which generally have a larger selection of doctors and fewer restrictions.

Although companies fear losing workers if they ask them to pay more for health care, they are scrambling to control costs.

DaimlerChrysler, which spends $1.4 billion annually to insure 400,000 people, is teaching insurers and hospitals how to reduce inefficiency while improving care as part of a wide-ranging program aimed at stabilizing its health costs.

Despite the Mercer report's seemingly rosy news for workers, the money for rising health care eventually will come from somewhere, economists say, possibly through lower-than-expected wage increases.

"Ultimately costs come out of workers' paychecks," says Ron Pollack of the advocacy group Families USA. He says public subsidies are needed to prevent low-wage workers from becoming uninsured.