Employers Expect Health Benefit Costs to Rise

By Rachel Ward

Rochester, NY – Health care costs are rising for local employers, and only a fifth of those employers say they'll pick up the tab for the majority of those costs.

The Rochester Business Alliance (RBA) conducted a survey that found that health care costs are expected to rise 11.8 percent this year.

Sandy Parker is the CEO of the RBA. She says the survey identified several trends as health care costs rise. "They're sharing the cost with their employees so more of the increase is really being shifted to their employee population. I think the other thing that we're seeing is more employers are focusing efforts on wellness programs, looking at down the road trying to be in a more prevention mode, which should end up lowering costs overall."

The survey asked 243 organizations from across industries what they expected their health care costs to be. It found that in response to rising costs, 16 percent of employers say they'll reduce benefits or offer cheaper plans, and 18 percent say they'll split premium increases with employees fifty-fifty.

Additionally, the number of employers surveyed who offer health benefits to part-time employees has dropped from 72 percent to 66 percent in the past year.

But Parker says rising health care costs are not unique to Rochester. "Health care premiums are escalating, in many cases double digit, all over the country. I think what we've seeing happening [now] is that back 10 years ago, the Rochester area had an advantage in this area; our health care costs were probably 35 percent below the national average."

Parker says that advantage has evaporated to costs that are only about 5 percent lower than national levels. That, coupled with some of the nation's highest rates of taxation, makes it hard to recruit business to the area, according to Parker.

But Jim Redmond, a spokesperson for Excellus Blue Cross Blue Shield, points to a bright spot in the RBA's data. He says the survey shows that 38 percent of respondents feel that their health care costs are lower than elsewhere, and that 42 percent of respondents thought costs were equivalent.

As for the accuracy of the predictions made by the RBA's respondents, spokespeople for the area's two big insurance companies, Excellus and Preferred Care, couldn't weigh in. Redmond said that his company's 2009 rates are still being determined by actuaries, though he notes that no one should be surprised if rates go up. He says the factors that contribute to rising rates, namely, the increasing cost of providing care to the aging Baby Boomer population, haven't changed.

Mike Trahagan, with Preferred Care said his company hasn't filed its 2009 rates either, and that any rate changes that were discussed with businesses at the outset of open enrollment are confidential.

One area in which the RBA found coverage levels expanding is in benefits for domestic partners. Over the past year, the percentage of employers who are extending coverage to domestic partners of employees is up to 51 percent, from 41 percent a year ago.