Health insurance costs inching up for Va. employers

Employers' health plan costs increased nationally by a moderate 6 percent this year - and slightly less in Hampton Roads - but employees are shouldering higher deductibles and co-payments, according to a survey released Wednesday.

The report by Mercer, a New York-based consulting firm, found that the median deductible in the most popular type of health plan increased from $500 last year for an individual to $1,000 this year in the United States.

Depending on the health of the employee, the moderate increase in premiums could be offset by higher payments for doctor visits and deductibles.

High deductible increases are less common in Hampton Roads, though more plans are making smaller increases or are adding deductibles that they did not have before, according to Richard Keat-ley, a senior consultant for Mercer. He said employers often raise deductibles to avoid increasing premium costs as much.

"I think you will see this region moving in that direction," Keatley said.

Among the 19 companies in southeastern Virginia that responded to the survey, health-plan costs went up 4.7 percent to an average of $7,353 per employee in 2008. That's less than the nation's 6 percent increase and the statewide hike of 7.4 percent.

Keatley noted, however, that 19 companies may not fairly represent the whole region.

The 6 percent national increase is moderate compared with double-digit increases in the early part of the decade, such as the 14.7 percent spike in 2002. The increases leveled to 6 percent in 2005 and have stayed about the same since then.

The survey showed that about a quarter of the 19 local companies that responded will increase deductibles, co-pays or out-of-pocket maximums in 2009. About a quarter were increasing employees' share of the premium contribution, and 19 percent were increasing the cost to employees in some other way.

Across the state, 39 percent of the 107 employers who responded were increasing deductibles and co-pays to employees in 2009; 29 percent were increasing employees' share of the premium; and 11 percent were increasing cost to employees in some other way.

Virginia employers said that if they didn't make such changes to their plans, their costs would rise by 9 percent in 2009 instead of an expected 6.4 percent.

The National Survey of Employer-Sponsored Health Plans is conducted annually by Mercer and includes private and public employer health plans with 10 or more employees. About 2,900 employers participated in the 2008 survey.

John DeGruttola, senior vice president for sales and marketing for Optima Health, said he's seeing the same patterns locally that the national survey found.

He said employers, to keep costs down, are asking more about wellness and smoking cessation programs and initiatives to manage disease. And interest is growing among employees in alternative plans with lower monthly costs but higher deductibles.

The survey showed that, in this region, employees contribute an average of $116 a month for a preferred provider organization in an employee-only plan, and $59 a month for a health maintenance organization. That compares with $90 a month statewide for a PPO and $67 for an HMO.

According to the survey results, southeastern Virginia lags behind the rest of the state in offering "consumer-directed" health plans, which typically have high deductibles and lower premiums while giving employees more control over how to spend their allotted health care dollars.

About 5 percent of the respondents in the region offered such plans in 2008, compared with 18 percent across the state.

DeGruttola, though, said he believes consumer-driven features such as health savings accounts are becoming more popular.

"Employees see the option as more transparent," he said.

The Mercer survey showed that among companies of 500 or more employees, 20 percent offered consumer-directed health plans in 2008, an increase from 14 percent during the previous year.

Elizabeth Simpson, (757) 446-2635, elizabeth.simpson@pilotonline.com