Employers Shift Healthcare Costs, Employees Use Benefits While They Last

John Commins, for HealthLeaders Media , April 20, 2009

The fear of layoffs is prompting more employees to use their health benefits while they still have a job. This stepped-up plan participation comes even as companies are shifting the mounting costs for health benefits onto the backs of employees, according to a new survey by the International Foundation of Employee Benefit Plans.

"Plan participants are feeling anxious about the possibility of increased cost-sharing and a reduction in benefits due to the financial crisis," says Sally Natchek, senior director of research for the Brookfield, WI-based IFEBP. "These fears are not unfounded."

Survey responses indicate that only 3.6% of companies are cutting or considering cutting healthcare benefits, and many will increase cost-sharing. Thirty-five percent of the companies say they are increasing employee deductibles, coinsurance, or copays due to the financial crisis. A similar percentage of companies are also increasing employee premiums. Other cost-sharing actions that plan sponsors are taking include adding consumer-driven health plans as an option (12.8%), replacing a current plan with a consumer-driven plan (9.6%), and instituting spousal charges (10.8%).

Plan sponsors aren't the only ones reacting to the recession. Survey respondents are reporting that plan participants, perhaps fearing an impending layoff, are increasing their use of health benefits.

About one-third of plan sponsors have noticed an increase in the number of participants filling prescriptions and engaging in costly medical procedures before their insurance runs out. Another 24% of companies have seen growth in the number of dependents on their plans. At the same time, nearly 18% of companies have introduced or are considering dependent eligibility audits.

Even those who are hanging on to their jobs are struggling with healthcare costs. About one-fifth of survey respondents report plan participants are delaying medical care and skimping on prescription drugs because of financial problems.

"The financial crisis has led some to conclude that healthcare and the economy are inextricably linked. You can't separate one from the other," says Natchek. "Given the burden of growing healthcare costs, it's likely that healthcare reform will continue to be at center stage. Eighty-five percent of responding plan sponsors believes that the financial crisis has made major federal reforms more likely."

The upside of today's climate is a heightened focus on wellness programs. Eighteen percent of the respondents have introduced or are considering introducing wellness initiatives due to the economy. The survey of International Foundation of Employee Benefit Plans members was conducted March 30-April 6. Respondents included corporate plan sponsors, public/governmental plans, multiemployer benefit funds, and others with benefit plans.

John Commins is a senior editor with HealthLeaders Media.

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