Deductibles soaring even for traditional health care plans

The high deductible has gone mainstream.

A national survey of employer fringe benefits has found that the median deductible for individuals in traditional health plans known as PPOs jumped to $1,000 this year, up from $500 last year, as a way for companies to shift more of their health care costs to employees.

For family coverage, the median deductible rose to $1,850, from $1,500, according to Mercer, a large benefits consulting firm.

PPOs -- preferred provider organizations -- are the most popular type of health plans, enrolling 69 percent of all covered employees, and traditionally they have been seen as categorically different from high-deductible insurance policies. Mercer surveyed nearly 3,000 employers who had at least 10 employees for its annual survey released Wednesday.

"Raising the deductible has become the fallback for employers faced with cost increases they can't handle," said Blaine Bos, the Minneapolis-based chief analyst for the survey. "It's the easiest way to reduce cost without taking more out of every employee's paycheck."

Ironically, it was the advent of so-called consumer-directed health plans, with deductibles of more than $1,100 and health savings accounts (HSAs), that may have encouraged employers to raise PPO deductibles without fear of employees rebelling, Bos said.

Less surprising, Mercer also saw a big jump in the number of large employers offering those consumer-directed plans. The Twin Cities has been a national leader in this trend. This year, 44 percent of the 75 Twin Cities employers surveyed offered plans that included health savings accounts, with 18 percent of their employees enrolling. That compares with 10 percent of employers nationally, who had 7 percent of employees enrolled.

The Mercer survey also found that health care costs per employee for PPOs rose by 6.3 percent, to $7,815 in 2008. Employees in HSA-linked plans cost significantly less at $6,207, up 4 percent from a year earlier.

While cost increases have stabilized, what will happen as the economy worsens is hard to say. In the downturn in 2001, employer costs jumped. Consumers who were worried about layoffs rushed out to get care that they might have otherwise delayed, and the same happened with laid-off people whose coverage was about to run out. This time, the high deductibles might cause more consumers to hesitate.

"There may still be a spike in use, but it may not be quite as pronounced," Bos said.

Chen May Yee • 612-673-7434

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