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Employers Foresee Bigger Health Cost Jump Next Year

By John Reichard, CQ HealthBeat Editor

August 18, 2010 -- Employers are expecting a bigger increase in health costs next year than they did this year, possibly because of changes required by the health care overhaul law, says a new survey by the National Business Group on Health.

The survey of the group's members also found that 63 percent of employers expect to increase the percentage of insurance premiums their employees must pay, and that 46 percent will increase maximums on out-of-pocket charges. Forty-four percent said they would increase deductibles for care received by providers in their networks.

The group consists primarily of Fortune 500 companies and large public sector employers.

Employers had estimated that costs would rise 7 percent in 2010; in 2011 they are expecting an 8.9 percent increase.

The survey found that 53 percent of employers were willing to make changes in the design of their plans, despite the fact that only limited changes can be made without a loss of "grandfather status," which exempts plans that were on the market when the overhaul became law from having to comply with some of its requirements.

But a number of the law's requirements do apply to grandfathered plans, and the employers surveyed are making changes. For example, 70 percent of those surveyed said they were removing lifetime dollar limits on overall benefits, 40 percent were making changes in annual dollar limits for specific benefits and 13 percent were removing provisions excluding coverage of pre-existing conditions for children.

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