Tight Economy Expands Health Plan Menu

By Lydell C. Bridgeford
February 24, 2009

A deep economic freeze may find more employers warming up to consumer-directed health plans and voluntary benefits, even as health care cost increases remain stable for 2009, new research suggests.

For example, 51% of employers are offering workers a CDHP this year, up from 47% in 2008, and another 8% expect to implement a CDHP by 2010, report analysts at Watson Wyatt and the National Business Group on Health in a new report on the economy and health care costs.

The HR consulting firm and the trade association found that employers with at least half of their workers enrolled in a CDHP have a two-year cost trend that is 25% lower than non-CDHP sponsors.

The survey of 489 large U.S. employers also reveals that respondents estimate that their health care costs will remain flat at 6% in 2009. That figure has held steady since 2007, but it's twice the rate of general inflation. Health care costs increased by 8% in 2006.

In 2008, the average health care cost per workers was $7,173, and it is estimated to rise to about $7,400 in 2009, the survey notes. Employees paid an average of 20% of their medical premium costs in 2008, which will probably stay the same in 2009.

"Cost increases have stabilized, but the financial crisis is causing many companies to reevaluate their health plan strategies," says Ted Nussbaum, group and health care practice leader at Watson Wyatt. "While large-scale changes appear unlikely, economic realities are leading companies to adopt strategies that emphasize greater personal health accountability to their workers," he adds.

For some employers, voluntary benefits are starting to make some noise as a cost-saving option. The International Foundation of Employee Benefit Plans recently reported that 39% of employers offer voluntary health insurance, with 40% providing voluntary dental insurance and 37% supplying voluntary vision insurance.

"Voluntary benefits can be a great option for employers with tight budgets that still want to help their employees obtain health care coverage or other types of insurance," says Julie Stich, senior information and research specialist at IFEBP. "Because group insurance premiums are typically less expensive than the premiums for an individual policy, offering voluntary benefits at the workplace can help employees who want the coverage but also need help making ends meet," she adds.