Our Terms of Service and Privacy Policy have changed.

By continuing to use this site, you are agreeing to the new Privacy Policy and Terms of Service.

Employer health care costs to jump 9% in 2011

By Julianne Pepitone, staff reporter


NEW YORK (CNNMoney.com) -- Companies that offer health plans will see their costs jump 9% in 2011, and most employees will pay higher deductibles as a result, said a report released Monday.

Employers will try to offset cost increases by requiring their workers to shell out more cash before coverage kicks in, according to a survey of 700 employers by PricewaterhouseCoopers.

By 2011, more than 50% of workers will have a deductible of $400 or more. In 2008, only 25% of companies said they had plans with deductibles that high.

In 2010, 13% of companies said their primary plans were those with high-deductibles -- generally considered to be $1,100 or more. That's more than double the level of 6% in 2008.

The report's authors said predicting 2011 costs was "especially challenging," since the past year has brought major changes not only to the health care industry but to the economy as a whole.

The overall 9% cost jump expected in 2011 is slightly smaller than the 9.5% increase that PWC had forecast for 2010, but "the small decrease hides a more complicated set of forces," the report said.

Inflators and deflators: The combination of the recession's impact and sweeping health reform is a mixed bag for employers' bottom line, the report said.

One major issue for companies: Cash-strapped hospitals and health providers will likely push more costs to employers. Hospitals are facing Medicare rate cuts, while more health providers are merging -- which means they'll be able to negotiate higher rates.

On the other hand, some changes are driving employers' health expenses down.

For example, the cost of providing COBRA coverage -- which lets some workers who quit, are laid off or otherwise leave their jobs to extend their health plans -- should return to "more normal levels" in 2011, saving employers money.

Also, several major brand-name drugs, including Lipitor, will lose their patents in 2011, opening them up to competition from cheaper generic versions. To top of page

Index Last Change % Change
Dow 16,065.67 51.29 0.32%
Nasdaq 4,339.33 70.57 1.65%
S&P 500 1,870.80 18.59 1.00%
Treasuries 1.73 0.00 0.00%
Data as of 12:49pm ET
Company Price Change % Change
Bank of America Corp... 12.20 0.00 0.00%
Facebook Inc 102.71 3.17 3.18%
Pfizer Inc 29.76 0.66 2.29%
Walt Disney Co 88.79 -3.53 -3.82%
Microsoft Corp 50.04 0.75 1.53%
Data as of 12:34pm ET
Sponsors

Sections

The self-proclaimed king of burgers now has hot dogs on the menu for the first time in its 62-year history. More

Fed Chair Janet Yellen's testimony highlighted concerns about the most recent volatility in global markets as well as the economy's gains. More

Digital, instant and on-demand. That's how we get our movies, travel arrangements, and even bills. Why not our paychecks? More

STEM3 Academy was started specifically for students with autism, ADHD and Asperger's Syndrome. Its STEM-based curriculum is breaking through barriers. More

Instead of asking how long your savings will last, ask how long you should plan for your nest egg to last so it can support you throughout retirement. More