What’s Ahead in 2008 Concerning Employee Benefits
By every indication, employee benefits—particularly health care—are primary concerns for American workers. As medical costs continue climbing, the issues will only become more critical for businesses of all sizes. Here is an assessment of what companies can look forward to in 2008 and beyond:
1. Rising costs in health care rates. Despite attempts to ameliorate bad news, costs will continue to go up and premiums will rise anywhere from 6 percent to 20 percent, depending on the plan and the group. The Towers Perrin annual health care cost survey for 2008 indicates a 7 percent increase, bringing the average corporate health benefit cost to $9,312 per employee. When will it level off? Not in the near future. PriceWaterhouse Coopers indicates that the three major factors driving up health care costs are inflation, an aging population and advances in medical technology and treatments.
2. More states will be mandating health care programs. With hospital emergency rooms serving as the health care delivery system for 45 million people across the nation who have no coverage, the bills for billions of dollars of these services are falling on taxpayers.
In an effort to push back the tide, we can expect to see more states following the lead of Massachusetts. California’s Governor, Arnold Schwarzenegger, supports the concept of compulsory coverage, and in Illinois, the idea is part of the broader issue of health care reform. While mandatory coverage seemed unlikely just a few years ago, the tide may be turning even though there are many hurdles, particularly regarding pricing and enrolling the young.
3. Greater interest in Health Savings Accounts. Expect to hear both pros and cons about health savings accounts (HSAs) this coming year as more employers seek to discover what is involved. As with most new financial products, it takes time for both employers and participants to develop a comfort level before the actual implementation curve begins to climb. HSAs hold out the promise of lower costs and are tax-advantaged at the same time.