U.S. employers held health benefit cost increases to about 6% in 2008 for a fourth straight year. This statistic is deceptive and would lead one to believe that health care insurance premiums are leveling out. The fact is that employer cost increases have held at 6% because more cost has been shifted to the employees.

The median deductible required by employers for individual coverage in preferred provider organization (PPO) health plans DOUBLED to $1000 from 2007 to 2008, according to the National Survey of Employer-Sponsored Health Plans conducted annually by HR consultancy Mercer. In 2000, only about half of employers imposed a deductible for PPO coverage (compared to about four-fifths in 2008), and when they did, the median amount was just $250. PPOs are the most popular type of group health plan, enrolling 69% of covered employees.

What makes this finding noteworthy is that it refers to traditional PPO deductibles reaching as high as $1000, not high-deductible health plans. $1000 deductibles are the norm for high-deductible health plans that allow an employee to contribute to a tax-free health savings account (HSA) which is used to pay for health care expenses. These consumer-directed health plans are growing rapidly and illustrate the change that has taken place in the employer health care insurance industry where employer costs have stabilized while employee costs continue to increase at a double digit annual rate. Raising the deductible has become the fallback for employers faced with cost increases they can’t afford.

Source: HR Magazine, January 2009, Stephen Miller