Firms embrace cost-sharing; sick pay most

As employers shift more health care costs to workers, the most susceptible may bear the greatest burden, experts say.

By Joel B. Finkelstein, AMNews staff. Jan. 12, 2004.

Washington -- More employers are turning to cost-sharing strategies to reduce their spending on health care premiums, but experts say these approaches are too blunt an instrument and often undermine workers' access to services and medicines.

Despite rising health expenses, employers narrowly sidestepped another record increase in their health insurance premiums by passing on more of the cost to their workers.

Greater focus on cost-sharing kept health care premium growth to a still-expensive 10.1% in 2003, down from nearly 15% in 2002, according to a survey by Mercer Human Resource Consulting, Washington, D.C. This year's average increase is expected to hit 13%, and Mercer officials expect employers to shift more cost to workers.

According to the survey, a third of employers raised HMO co-pays for physician office visits last year. The average co-pay in 2003 was $15, but a third of HMO plans had co-pays of $20 or more. Many employers reduced covered services, and deductibles and out-of-pocket spending limits jumped.

Some employers have abandoned co-pays for coinsurance, in which patients pay a percentage of the cost of care, rather than a flat fee. And some employers have resorted to multitiered drug formularies that encourage the use of generics and other low-cost alternatives to brand-name drugs.

"With rapidly rising health insurance premiums and a continued backlash against managed care cost containment, efforts have really shifted from focusing on trying to change provider behavior to looking to change consumer behavior," said Joy Grossman, PhD, associate director of the Center for Studying Health System Change, Washington, D.C.