After nearly a decade of stable or slowed increases, health care costs in Florida will rise again in 2011. At least this is the outlook suggested by Mercer, a top benefits consulting company, which announced the results of its national health care survey at the end of 2010. Nationwide, the study results showed a 6.9 percent jump in health benefit costs per employee in 2010 – the highest since 2004. In 2011, the projected average increase is 6.4 percent.
The slight silver lining for Sunshine State residents is that, at 6.1 percent, cost increases are expected to be a bit lower than in many other states. Still, this means that employers will need to come up with higher employee contributions in order to minimize their own financial fallout. Most already have plans in place to do so: Of the 126 Florida businesses that participated in Mercer's study, 43 percent said they will raise deductibles, copayments, co-insurance, or out-of-pocket maximums in 2011, while another 43 percent will raise premium contributions. Additionally, 16 percent of employers plan to find other ways to transfer the cost increases to employees.
This is on par with changes that occurred in 2010. In a Nov. 17, 2010 press release, Beth Umland, Mercer's director of health and benefits research, said, "Employers did a little bit of everything to hold down cost increases in 2010. The average individual PPO deductible rose by about $100. Employers dropped HMOs, which were more costly than PPOs this year. Large employers added low-cost, consumer-directed health plans and found ways to encourage more employees to enroll in them. And more employers provided employees with financial incentives to take better care of their health."
The fall of the HMO
One trend that looks likely to carry extra weight in Florida in 2011 is the continued decline of the HMO. Although enrollments have fallen across the country for the past six years, HMO penetration in Florida has remained high. Last year, a substantial drop finally occurred, with HMO offerings falling from 56 percent in 2009 to 46 percent in 2010. Matthew Snook, a Mercer principal in the Tampa office, sees this trend continuing over the course of the year.
"Realistically, I see a long, slow continued decline in prevalence and enrollment, as [HMOs] are bringing no incremental value to employers in terms of real cost management or improved purchasing opportunities," Snook said in an email interview.
In their place will likely follow a greater reliance on consumer-driven health plans, which, in 2010, cost employers nationwide nearly 25 percent less per employee than any other type of health benefit program. This level of financial reward is hard to ignore, although Snook noted that these plans have yet to make huge strides in Florida's benefits landscape.
"In Florida, the shift in enrollment has primarily been from HMO to PPO, with CDHP enrollment holding steady at 10 percent from 2009 to 2010," Snook said. This stagnancy notwithstanding, he believes that CDHP penetration will increase in Florida as the appeal of HMOs continues to fade.
