Minnesota employers see 4% health cost increases – Star Tribune

A new survey finds health benefit costs for active employees in Minnesota are up 4% this year to an average of $12,850 per worker.

The report from New York-based benefits consultant Mercer says Minnesota employers expect the pace of health benefit cost increases to pick up slightly next year to a 4.4% pace.

The Mercer study looks at the cost of coverage for an individual worker, as opposed to workers with family coverage. In September, the California-based Kaiser Family Foundation looked at the cost of family coverage in employer plans and found the average annual cost had pushed above $20,000 for the first time.

“This is higher than what it should be,” Rey Balcazar, a consultant with Mercer’s health business in Minneapolis, said of the 4% rate of increase. “Inflation was running last year at a little bit over 2%.”

Across the country, Mercer says the average total health benefit cost per employee is growing 3% this year to $13,046 for individual coverage. This is the eighth consecutive year of health benefit cost growth in the low single digits, the consulting firm says.

“Health benefit cost management remains an imperative for most organizations,” Mercer said in a summary of the national results.

The new study is similar to past Mercer reports in suggesting average premiums in Minnesota are slightly lower than the national average. And, like earlier reports, employers here say they expect premiums to increase at a pace that looks slightly higher than the rate expected by peers across the country.

Balcazar attributed the differences to the popularity here of high-deductible health plans, which typically have lower monthly premiums.

The Kaiser survey found unique challenges for low-wage workers, since they are less likely to be offered employer coverage and must pay a larger share of the premium when they have the chance to buy it. In the Mercer survey, 42% of large and midsize employers said addressing the cost of coverage for low-wage workers was an important or very important strategy going forward.

Compared to double-digit increases more than a decade ago, premium increases have been relatively low for the last several years. One reason is that employers have been keeping a lid on premium increases by passing on more costs to workers by way of higher deductibles and other out-of-pocket spending requirements for those who use health care.

The Mercer survey found that most large and midsize employers are putting a pause on expanding these cost-sharing requirements. That’s true in Minnesota, too, Balcazar said.

Instead of continuing to pump up deductibles, employers are now looking at what Balcazar described as innovative strategies, such as programs that encourage patients to use “telemedicine” or online health care services for basic needs rather than visits to brick-and-mortar clinics.

“It’s more cost-effective that way,” Balcazar said.

 

Leave a Reply

Close Menu