NCPA - National Center for Policy Analysis

Companies Ask Patients to Pay More

October 22, 2003

Employers are shifting a growing share of the cost of health care onto employees who make the heaviest use of medical services, according to the benefits consulting firm Hewitt Associates. They have tempered increases for workers who pay a monthly insurance premium but rarely see a doctor, so healthy workers are not tempted to drop their coverage, experts say.

According to Hewitt's latest survey of 300 employers with 5,000 or more workers:

  • On average, the annual out-of-pocket costs for employees of large companies have more than doubled since 1998, to $2,126 this year, according to Hewitt, and are expected to jump 22 percent next year, to $2,595.
  • Employees' out-of-pocket costs rose from 9.6 percent of the average total cost of employee health care in 1998 to 12.0 percent in 2003.
  • Their premium payments rose from 15.7 percent of costs to 18 percent over the same period.

Employers still pay the bulk of their workers' health care bills, although their contribution has slipped from 75 percent to 70 percent of employees' total health care costs over the past five years. The average employer contribution per employee was $5,000 in 2003, compared with $4,000 in 1998.

The trend toward more patient cost sharing is taking the form of rising copayments and deductibles, higher payroll deductions to cover spouses and children and new kinds of health plans that give workers a fixed sum to spend, called defined contribution or consumer-directed plans, says the New York Times.

Increased cost sharing has probably shaved one percent off the rate of increase in the use of health care services -- which has been increasing 9 to 10 percent per year -- says health economist Paul B. Ginsburg of the Center for Health System Change.

Source: Milt Freudenheim, "Workers Feel Pinch of Rising Health Costs," New York Times, October 22, 2003.


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