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

Search for Jobs

Index Last Change % Change
Dow 19,827.25 94.85 0.48%
Nasdaq 5,555.33 15.25 0.28%
S&P 500 2,271.31 7.62 0.34%
Treasuries 2.47 0.01 0.33%
Data as of 5:29pm ET
Company Price Change % Change
Bank of America Corp... 22.64 0.11 0.49%
General Electric Co 30.53 -0.68 -2.18%
Bristol-Myers Squibb... 49.23 -6.26 -11.28%
CSX Corp 44.33 -1.18 -2.59%
Chesapeake Energy Co... 6.69 0.07 1.06%
Data as of Jan 20
Sponsors

Sections

Shares of several uranium miners are soaring this year on hopes that Donald Trump will commit more investments to nuclear power. But investors need to get careful. The stocks are as volatile as radioactive elements. More

President Trump promised to 'buy American and hire American.' He says his policies will create 25 million new jobs, the most of any U.S. president in history. CNNMoney lays out just how hard that will be. More

Senators Chuck Grassley and Dick Durbin plan to reintroduce their bill for revamping the popular H-1B visa program. More

If you're smart about when you first claim Social Security, you can increase your benefits and reap the rewards for the rest of your life. More