The cost of health benefits to employers is expected to rise about 5.4% in 2012, the slowest rate of increase since 1997, according to preliminary annual survey data from benefit consultant Mercer. There are two reasons why:
1. Employers continue to shift costs to employees or reduce benefits. Excluding these types of plan changes, costs would rise about 7.1% in 2012. In other words, employers expect to shift about two percentage points of underlying cost increases to employees next year. In the past few years, the cost shift had been more like three percentage points — largely because underlying costs had been rising at a faster pace (9% annually over the past five years). “If the underlying trend is lower to begin with, employers will be likely to shift less cost,” Mercer says.
2. Use of healthcare services is slowing, which may be a result of a bad economy combined with higher deductibles and other forms of cost sharing, Mercer says. In other words, people can’t afford to spend as much on care so they go without. Another possibility, Mercer says, is health improvement programs are keeping people out of the emergency room and consumers “are more aware that overuse and misuse of health care services will directly impact their wallets as well as their employer’s budget.”
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