VideoHealth-care insurance premiums surged 13.9 percent in 2003, a larger increase than last year and the third straight annual double-digit hike, according to a survey of 2,808 companies by the Kaiser Family Foundation and the Health Research and Educational Trust. It was also the largest increase since 1990.
The reasons for the large premium growth: Companies cited high prescription drug spending (61 percent) followed by higher spending for hospital services (55 percent).
To hold down the rising costs, most companies are passing more and more of their health costs to their employees, especially those with dependents. Worker contributions for single coverage were stable, but contributions for family coverage rose 13 percent, according to the survey.
Over the past three years, the amount of the premium that employees pay for family coverage has surged nearly 50 percent, to $2,412. The typical family health insurance policy now costs $9,068, with employers shelling out 73 percent of this total and the employees, the rest.
Workers are also seeing higher deductibles for out-of-network services in PPO plans, higher co-payments for office visits in HMOs, and higher prescription drug co-payments across all plan types.
In addition, more than 40 percent of workers must pay a separate deductible, co-payment, or coinsurance for each hospital admission. These deductibles and co-payments average about $200 per admission.
Employers are not exactly accepting the price hikes without a fight. Nearly two-thirds (62 percent) said they shopped for a different arrangement, and one-third said they either changed carriers or plan types. (Much of the advice we gave in our most recent special report on health-care costs applies even more today.)
One favored way of holding down the rising costs is by offering employees higher deductibles — defined as at least $1,000 for single coverage. This strategy is especially popular among larger companies.
For example, 17 percent of companies with 5,000 or more employees offered such a plan this year, while another 16 percent said they are highly likely to add such a plan next year.
This tactic is much more favored than dropping coverage altogether; just 10 percent said they will reduce eligibility and just 16 percent said they will drop coverage.
However, according to The Wall Street Journal, a growing number of companies are aggressively hiking the premium for family coverage, offering incentives to push working spouses from their plans or refuse to cover spouses who work for companies with similar health plans.
The newspaper points out, for example, that Verizon Communications' tentative contract agreement with its unions includes a $40 monthly fee for employees whose working spouses decline comparable health-care coverage at their own company.
Boeing currently charges workers an extra $100 a month if their working spouse or domestic partner chooses Boeing's health plan rather than their own, according to the paper. And earlier this year General Electric said it will charge more for large families than for small families.
One motivation for trying to scale back generous family benefits: As much as 70 percent of the health bill at large companies goes to covers the expenses of spouses and children, the Journal reported, citing Hewitt Associates.
Sarbanes-Oxley: "The Best Thing to Have Happened to Us"?
So far, so good, seems to be the assessment of Sarbanes-Oxley by James H. Quigley, chief executive officer of Deloitte & Touche, a little more than a year after passage of the landmark bill.
"I have the greatest confidence in the integrity of our profession and the chief executive officers across corporate America," Quigley told an audience at the National Press Club. "Clearly they understand the importance of Sarbanes-Oxley to restoring public confidence in American business. Five years from now, we will look back on Sarbanes-Oxley and say that it was the best thing to have happened to us."
Quigley's confidence is based, in large part, by a recent Deloitte poll, which found that audit committees are meeting more frequently and for greater periods of time since the adoption of the act's requirements.
For example, of the 66 top Deloitte clients surveyed as of September 3, only 11 held more than six audit-committee meetings a year prior to the passage of the act; 39 do so now. And previously, half the companies surveyed met for less than one hour per meeting; now that's true of only 10 percent.
The responses came largely from manufacturing, consumer, and financial services companies. The majority of responses came from companies with revenues of $1 to $5 billion (48 percent) or more than $10 billion (26 percent).
Quigley added, however, that the business community and investing public must resist the clamor for further corporate governance legislation until the changes and ramifications of Sarbanes-Oxley have been fully absorbed.
"The real test of the success of the Sarbanes-Oxley legislation lies ahead in the next market bubble — and our compliance with the intent of the law," he said. "Now is not the time to further complicate the environment and make it more difficult for Sarbanes-Oxley legislation to have its intended effect." (Certainly, the CFOs who are totting up the compliance bill — and suffering from "Sticker Shock" — would second the motion.)
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