Human Capital & Careers

Employers Seek Benefit Cost-Sharing

While families are paying more for health care, their share of the bill has reportedly been growing more slowly than total medical costs.
Stephen TaubMay 27, 2005

A number of prominent companies are requiring their rank and file to pony up more money for health insurance, either in the form of high co-payments or a larger share of the premiums.

Indeed, the average family of four covers about 17 percent of its total health care costs, according to a new report from Milliman, an actuarial and consulting firm. The out-of-pocket costs for such a family would rise to $2,035 this year, based on a typical plan design for a preferred provider organization (PPO).

To be sure, the out-of-pocket cost is about $500 more than it was in 2001. Even so, the growth of the employee share is slower than the growth in overall medical costs, according to the study, which is based on claims data and the company’s analysis of provider contracting. In 2002, for instance, the consumer share rose 6.8 percent, while the total medical cost increased 9.8 percent; this year, the consumer share grew by 6 percent as the total cost jumped by 9.1 percent.

At the same time, some unions are resisting attempts by employers to get employees to pay a bigger share of their medical costs. Earlier this week, Teamsters at Coca-Cola bottling and distribution facilities in Hartford, Connecticut and Los Angeles went on strike over the breakdown of current contract negotiations and Coke’s continuing push to have workers pay more for their health-care benefits.

Continental Airlines is also pushing for more employee cost sharing. The company said, however, that it would will cap health costs this year for the rank and file in unions that agreed to wage and benefit concessions back in March, according to the Houston Chronicle.

“Your share of projected total medical insurance costs for each of the next three years will not exceed the level that is in effect today,” the company told the unions, according to the paper. The company reportedly said it was making the promise “even though medical costs are expected to continue to rise at a rapid rate,” the paper added.