Health care headache could ease up
But study says workers' share of costs to rise a bit
June 14, 2007, 10:40PM
By Purva Patel Copyright
2007 Houston Chronicle
The cost of what Houston-area employers pay to cover their workers' health care is expected to grow at a slower rate this year, according to a study to be released today.
Costs will rise only 5.6 percent, offering some relief to businesses facing growing expenses, according to Employee Benefit Solutions, which jointly conducts the annual review with the Houston Business Group on Health, a nonprofit comprising some of the area's largest employers.
Last year, costs climbed 6.4 percent and they soared 12.2 percent in 2005, the study said.
The survey questioned 167 area businesses in various industries that collectively employ more than 260,000 Houston-area residents and more than 641,000 people nationwide.
The reprieve may be because of many factors, including a strong local economy as well as a push toward consumer-driven plans, according to local experts.
Brett Haugh, a principal at Houston-based Employee Benefit Solutions, pointed to high employment and productivity levels in Houston.
"When people are productive, they're not as likely to pay attention to health care issues," he said. "People do tend to address those issues when the economy lags and workers are fearful for their job. They utilize health care services more due to uncertainty."
The average health plan will cost $7,433 per worker, compared with $7,038 in 2006, according to the survey.
In 2007, employees will contribute $1,760 of that cost.
The survey did not have comparable numbers for employee contributions in 2006.
Baker Hughes has seen its health care costs increase 6 percent in the past year, much less than the 14 percent it projected costs would rise three years ago, said Michele Gest, director of global benefits for the company.
Baker Hughes began to focus more on preventive care in recent years, offering 100 percent coverage for preventive procedures such as mammograms and prostate exams, Gest said.
The survey noted that there has also been a slight push for more consumer-driven health plans, usually with more choice and more costs for the worker.
Such plans represent 9 percent of those offered among the employers surveyed, up 2 percentage points from 2006.
"The main idea behind this is that employees will many times make better choices when there's more financial risk then there was in the past," said Mike Ellis, a managing consultant with Watson Wyatt Worldwide. "We've also seen employers moving away from copayment to coinsurance plans."
To control costs in the future, the majority of employers surveyed said they are considering offering consumer-directed plans, adopting a disease-management program and increasing future employee contributions.
Still, Haugh said growth in consumer-directed health care has been slow because employees aren't really empowered to be consumers.
"There is no objective cost and quality data for people to be able to make personal health care decisions or comparisons that are really meaningful and relevant," Haugh said.
For example, Haugh said that when he took his 9-year-old daughter to the doctor for a cut on her forehead, he was told he could choose between a plastic surgeon or a general physician. Unsure of the difference in the cost or quality between the two, he went with the surgeon and paid thousands more than he would with the general practitioner, he said.
He also noted that with Houston's low unemployment rate, the importance of strong health benefits as part of a compensation plan is rising.