EMPLOYEE BENEFITS Holding down health costs

SCRIPPS HOWARD
Younger workers and senior citizens alike can expect out-of-pocket costs for health care to go up next year, new surveys indicate, but another report shows that most Medicare beneficiaries will fare better under the new prescription-drug plan that begins in 2006.
While the rate of increase in health premiums for employers fell to the lowest level, 7.5 percent, this year since 1999, according to a survey by Mercer Human Resources Consulting, the reduction came largely because businesses are asking workers to pay more in premiums, deductibles and co-payments.
With increasing numbers of employers requiring workers to pay as much as the first $1,000 of health-care costs before insurance kicks in, along with bigger co-pays for everything from brand-name drugs to visits with out-of-network doctors, some more "open choice" insurance plans are actually seeing fewer claims this year.
"When you start the year with a $1,000 deductible and don't see any major expenses ahead, you think twice about going to the doctor if you have a cold," said Blaine Bos, a consultant in Mercer's Minneapolis office and one of the survey's authors. "The downside, of course, is that you may also put off getting necessary care, and that's not good for anyone."
The average total health-benefit cost per active employee, including medical and dental for workers and dependents, was $6,679 this year among the more than 3,000 firms with at least 10 or more employees in the survey.
For Medicare patients, the government has already announced that Part B premiums for doctors and other nonhospital care will rise 17 percent to $78.20 a month next year, with a deductible of $110, up from $100 this year. Officials say the increases are tied to higher payments to providers as well as coverage of some new services.
Beginning in 2006, Medicare patients who choose to enroll in the new Part D prescription-drug plan will have to pay premiums of about $35 a month unless they qualify for low-income subsidies.
Analysis
A new analysis of the drug plan released Monday by the Kaiser Family Foundation found that low-income patients who enroll -- an estimated 8.7 million people -- will pay an average of 83 percent less for prescription drugs in 2006 than they would if the coverage weren't available, while the remaining 20.3 million patients expected to enroll but not eligible for the subsidies would pay an average of 28 percent less out of pocket.
"This shows that the prescription-drug law will provide the most help to seniors with low incomes and very high drug bills, just as Congress intended," said Drew Altman, the nonprofit foundation's president.
Regardless of whether they get the subsidy or not, the study predicts that three out of four who sign up the for drug benefit in 2006 will spend the same or less money out of pocket for drugs than they do now.
But the remaining quarter will face higher out-of-pocket costs, not counting premiums. Among them would be seniors with relatively high drug costs who lose coverage from an employer or former employer and must rely on Medicare only.
Although the new Medicare law offers a subsidy to companies that continue drug benefits to retirees, the Mercer survey found that of those providing such coverage now, 7 percent plan to drop it in 2006, 40 percent would keep their current plan and apply for a subsidy and 24 percent would pay only secondary to the Medicare benefit.