Orange County Register

Respond to our survey and then read how companies are dealing with higher health insurance costs:

Health insurance premiums will rise 5.7% in the coming year, according to preliminary findings of the annual survey of more than 1,300 employer health plan sponsors by Mercer, a consulting firm.

Recently, Register.com readers identified health insurance costs as the second biggest business problem in Orange County. Click here to see results. It was No. 1 in a national survey conducted by the National Federation of Independent Business.

Huge numbers of the smallest businesses said they dropped employee health insurance in 2008, primarily because of rising costs, according to a separate survey by the National Association for the Self Employed. 

In the Mercer survey, small employers the hike will be 10%, and for large companies it will be 8%, if they don’t make any adjustments in order to cut costs.

Almost 3 out of 5 employers said they would take steps to cut back that price hike.

So what’s so good about another round of price hikes that have trimmed coverage and increased co-payments both for companies and their employees? This year’s increase is lower than the double-digit hikes for three previous years, Mercer says.

Complete results of the survey will be released later in the year.

Already, employers say they will make these changes to hold down their costs in 2009:

• Raise deductibles
• Increase co-payments
• Obtain co-insurance
• Hike employee out-of-pocket spending limits
• Add a consumer-directed health plan that combines high-deductible insurance with employee controlled health spending account.

Employees’ share of health insurance costs have risen sharply in recent years. Between 2003 and 2007, the median family deductible for in-network services in a PPO (preferred provider organization, most often offered by employers) increased $500 to $1,500, Mercer said.

Even though consumer-directed health plans cost about 20% less than a typical medical plan, very few employers have moved to offer it. This year, 20% of employers with 500 or more workers say they are “very likely” to implement such a plan by 2009.

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