Employers Change Health Plans By Shifting Costs

According to the Center for Studying Health System Change (HSC), most employers have made modest changes in their health benefits plan and are primarily shifting costs to employees through larger premium contributions or higher out-of-pocket costs to fill a prescription or see a doctor.

"Despite predictions that the weak economy would spark an overhaul of health benefits, most employers have moved cautiously—but steadily—to increase what patients have to pay," said Paul B. Ginsburg, Ph.D., president of HSC, a nonpartisan policy research organization.

The shift in costs to employees is outlined in a new HSC Issue Brief titled, Employers Shift Rising Care Costs to Workers: No Long-Term Solution in Sight. The study is based on HSC's 2002–03 site visits to 12 nationally representative communities: Boston; Cleveland; Greenville, S.C.; Indianapolis; Lansing, MI; Little Rock, AR; Miami; northern New Jersey; Orange County, CA; Phoenix; Seattle; and Syracuse, NY.

"Most employers were unwilling to run the risk of alienating workers by curtailing their choice of physicians and hospitals," said Lydia Regopoulos, co-author of the brief. "In essence, they maintained choice at a price."

The HSC brief also noted that some employers are promoting public insurance as an alternative source of coverage for children of their low income employees, and many reported modifying family coverage or planning to do so, using one of two strategies: (1) changing relative premium subsidies between single and family coverage; and (2) encouraging workers' spouses to obtain coverage through their own employers.

Employers increased patient cost sharing either by passing on a larger share of premiums to workers or by increasing co-payments, deductibles, and co-insurance. For example:

• Employers who were still paying the full premium started requiring employees to pay a part of their health insurance premium. (Employers who already required premium contributions, however, typically did not increase the contribution percentage.)
• Employers with modest patient co-payments increased them. Many also introduced new co-payments for particular services such as specialist care, urgent care, and outpatient surgery.
• Some employers who already had high co-payments replaced them with co-insurance.