Insurance Information

A large survey of companies’ benefit health care plans has been released by Towers Perrin as their annual survey of Health Care Cost.

An analysis of the data by coverage level, show that the average reported cost of medical coverage is $5,124 annually or $427 per month, for individual employee only plans. Plans that cover the employee plus only one other dependent are averaging $10,500 annually or $875 per month. Family plan coverage that covers the employee plus all of he or her dependents are running on the average at $15,084 annually or $1,257 per month.

Survey reports show that the employers continue as in the past, to pay most of the premium for health coverage. But in spite of this the portion covered by the employee continues to grow and to become increasingly unaffordable.

Health Care Reform
The question is being asked by many as to whether or not health care reform will be able to alleviate the growing affordability problem that is currently facing both employers and employees? Data from the Towers Perrin annual survey of Health Care Cost, the 2010 Health Care Cost Survey, as well as other recent Towers Perrin studies, suggest that the reform legislature that is shaping up at this time in fact has the potential of actually increasing the portion that employers have to handle and that those additional costs will probably be passed on to employees, creating an even greater breach in the already extensive affordability gap.

One possible example is a controversial provision of the reform proposed by the Senate Finance Committee. It is an excise tax slated to begin 2013, attached to health programs with various combined coverages such as medical, dental, vision, etc. The tax is estimated to reach more than $8,000 per year for each individuals and as much as $21,000 for a family. Although the caps that have been set seem high, the current data project that more than 50% of companies will reach these caps during the next three years assuming that current cost trends are to continue, and the affect that these caps will have are expected to increase over time.

Dave Guilmette who is the managing director of Towers Perrin Health and Welfare, suggests that if we look at the fact that health care costs have increased approximately by 150% during the last decade, it would not be surprising if companies are nervous about the efforts for reform which seem to have the potential to increase costs even further. The fact is that the health care reform survey discovered that nearly half of employers believe that being forced to purchase health care benefits will have a negative affect on their business. The study also shows that a mere 11 percent of the companies surveyed would be willing to absorb higher health care costs through the acceptance of reduced profits. They would have to reduce benefits before accepting greater costs. This would also mean higher costs for employees who would be expected to share a greater portion of the burden.

Another potential result of any health care reform might also be further increases in the popularity of account-based health plans (ABHPs). In order to costs, in recent years many employers have adopted ABHPs. These plans feature tax-favored savings opportunities for employees. The lower actuarial values attached to these plans are the result of their including traditional health plans, and this can help employers by delaying reaching the excise tax cap limits by up to two years.