Rising Health Care Costs Create Ripple Effects

As health care costs have increased, employees have cut back on workplace benefits they receive at additional costs, and have switched to less expensive health plans or dropped their health care coverage completely, according to an American Express Financial Advisors survey (2003).

Of the 958 people responding to the survey, more than two-thirds said their share of health care costs had increased. As a result, 55% said they are reducing discretionary spending, 24% are cutting back on workplace benefits that carry additional costs, 12% said they are switching to less expensive health plans, and 6% are dropping their health care coverage completely.

In addition, 37% of those responding said they are planning to decrease the amount allocated toward their savings and investment plans. Rusty Field, a vice president with AmEx's Financial Education and Planning Services, said "employees need to be well educated on the options they have to help them handle the increase in health care expenses without compromising their ability to save for the long term."

American Express said the survey results showed that increases in health care expenses can have a measurable effect on respondents' levels of financial stress. As a result, 70% said they would be interested in attending a free financial seminar to help them understand and address rising health care costs.