Three studies by Hewitt, Towers Perrin, and Information Strategies Inc. indicate that healthcare premium cost increases may be moderating for employers.

At the least, these studies and others conducted by Information Strategies show that employers are being more aggressive in their dealings with insurers as a paradigm shift appears to be growing in providing employee healthcare benefits.

The three studies indicate a stronger than usual desire on the part of employers to contain healthcare cost increases. These objectives are causing more aggressive negotiations by employers with their insurance providers and agents.

The Tower Perrin study of 200+ large employers (which is about to be released) shows that overall costs for healthcare premiums for a large swath of employees will increase a modest 6%.

Among the Fortune 1000 employers, respondents indicated they were aggressively negotiating rates with healthcare providers and holding the line on benefits offered.
The study also shows a growing trend towards educating employees about the need for better self-management of their health.

The Hewitt Associates study indicates that healthcare insurance costs are being held to about 5.6% for all employers.

Information Strategies annual healthcare cost study reinforces the perception that employers are shifting more of the costs to employees.  There was a 20% increase in the number of companies shifting more of the costs to employees.

Health and wellness programs were instituted by 19% of the reporting companies, up from just 10% in 2006.

At the same time, all three studies cited the conflicting imperatives of recruiting and retaining employees as one of the key considerations in their balancing act concerning healthcare.

Separately, an Information Strategies survey of agent/brokers indicates that clients are demanding more innovative ways to provide healthcare coverage to employees.

Of 200+ agent/brokers responding to a survey, more than 50% said they had been asked to provide some form of Consumer Directed Healthcare offerings.  Many reported this was the first time they had been asked to provide such offerings.  CDHC offerings were defined as HSAs, HRAs or FSAs. 

As one HR executive told Information Strategies, “we simply need to find another answer to rising healthcare costs without jeopardizing our current employee morale base.”

Despite the reduced increases, they remain hefty for many companies averaging $400+ this year.  For employers with 10,000+ employees, this represented more than $4+ million in added costs, which are usually passed on in some form to clients and/or consumers.

Another straw in the wind, Federal employees will face only minimal increases in their healthcare insurance premiums in 2007.

The federal agency that oversees this program says unused reserves form a great bulk of the reason for the reduced rate increases which have average 6+% in recent years.  Officials cited improved wellness programs coupled with reduced usage by federal employees that saw a major reduction in costs for insurance providers.
Health insurance premiums for federal employees will increase by an average of 1.8 percent next year, the lowest annual increase in the government's employee program since 1997.

Officials said they substantially slowed the rise in 2007 insurance rates by dipping into excess financial reserves of the Federal Employees Health Benefits Program, which provides about $33 billion in health-care benefits annually. They said the reserves had increased in recent months because insurance claims and other expenses had not grown as fast as estimated.

Next year, 63 percent of FEHBP enrollees "will see no increase in their premium," said Linda M. Springer , director of the Office of Personnel Management, which administers the program.

She said 15 percent of the program's enrollees will see a premium increase of less than 5 percent.

The federal program will offer 284 plans next year and will provide insurance coverage to about 8 million Americans -- civil service and postal workers, retirees, and family members. The government picks up about 71 percent of premium costs in its role as an employer.

Next year, individuals will pay an average of $1.45 more per two-week pay period, and families will pay $3.13 more biweekly.

More than 56 percent of FEHBP enrollees are in two plans provided by the Blue Cross and Blue Shield Association, and Blue Cross enrollees will see their share of the premium drop or stay the same.

Enrollees in the Blue Cross standard option will pay $57.30 biweekly, 77 cents less than this year. Families covered by the standard option will pay $134.30 biweekly, $1.29 less.

The Blue Cross basic option, which requires enrollees to stay in the Blue network, will not raise premiums for the third consecutive year. The enrollee cost will be $37.99 for individuals and $88.99 for families on a biweekly basis.

Data provided by the OPM showed that $500 million will be drawn out of the program's cash reserves, bringing down next year's premium increase by 5 percentage points. Otherwise, federal employees and retirees could have faced a rate increase of 6.8 percent, in line with this year's premium rise.

The program's reserves "are more than adequate," Springer said. "Everything is financially sound here." Rate decisions "are not things that are manipulated," she said. "They are certainly not political."