Rising healthcare costs giving you a coronary?

First: Many thanks to those who responded to the survey.

Here are the results of my small, informal, and unscientific survey of friends and colleagues, including (but not limited to) HR folks, executives and owners, and people in high-paying, high-tech jobs.

Fourteen people answered each question directly. Others provided interesting anecdotes, but didn't respond with values. I have included a little of both. First, the "statistical" answers:

1. Does your organization currently pay 100% of the medical premiums for employee, spouse, and family? If not, what percentages are paid?

Responses follow, with one paragraph per respondent. Where necessary, the answer has been edited to reflect the percent payed by the employer, not the employee. Where the response is a direct quote, I have added quotation marks.

1. Approximately 90% for the HMO plan, 75% for the PPO plan.
2. 60-80%.
3. 73%.
4. Approximately 85% for employee and dependents.
5. No. (This person's employer uses a tiered approach for families of varying ages and incomes.)
6. "100% employee. mumble% spouse (50?), child unknown."
7. 75%.
8. 100% for employee and 50% for dependents.
9. "We currently get 100% of the employee's medical and dental covered. There are upgrade plans, e.g., an improved medical plan and cancer insurance, which the employee pays group-rates for. Spouse and kids are covered at a rate that puts the company's overall expenses near the national average (for software companies?), which I think was 76%; I think the company covers something like 48% of the cost for spouse and family."
10. 75% for employee and dependents.
11. "Yes." I.e., 100%.
12. 100% for employee, 0% for dependents.
13. "We [the company] used to [pay 100%] until this January."
14. 100% for employee and dependents.

2. Does your organization have plans to reduce that benefit, particularly for spouse/family?

The same respondents, in the same order:

1. No.
2. Not sure.
3. Not sure.
4. No.
5. No.
6. No.
7. No.
8. "Two digit rate increases would trigger one of the following: put the contract out to bid to see if another carrier will cover us at more reasonable rates or ask the employees to contribute more of the cost. Another option that companies consider are the HSA (health savings plans)...a good option for new companies - and they have the added benefit that whatever the employee doesn't use can be accumulated for their use at a later date."
9. "I expect the family benefit to increase, and perhaps the employee benefit to decrease..."
10. "No, in fact we had no spouse or dependent coverage until a recent benefit increase."
11. No.
12. No.
13. "They just did."
14. No.

3. If you were to reduce such a benefit, would you do so only for new hires, or would you reduce the benefit for existing employees?

The answer from all who chose to respond to this question was that such changes would affect everyone. I was not surprised. Some respondents made me realize that, though there are no stupid questions, there are some that qualify as absurd.

In the interest of fairness we would make the change across the board for all employees.

-- HR executive, financial sector

We firmly believe in the "same rules and perks for everyone" philosophy...

-- COO, software consulting firm

Grandfathering equity morsels is one thing -- not health benefits.

-- Colleague, at a company whose name is now a household synonym for "search" ;-)

Other Respondent Comments

A friend, ex-employer (early 90's), and company president had this to say:

As you know, I used to pay full medical benefits.

There can be enormous differences in costs. For a young person, it may "only" be $100 or so per month. For [my spouse] and I, and a fairly high deductible ($2000 or $2500 I think) it is a little over $1000/month now. But what is even more scary is that increases are very rapid. I've had increases in this cost of over 20% year to year at times.

Be sure to look at Health Savings Accounts. They may encourage better use of healthcare.

Since over 1/2 my business is with doctors, I hear a lot about health insurance. At best, it is a horrible mess. The inequities and stupidity in the current system are incredible. I'd estimate that over 25% of all healthcare dollars go into administering the finances. That number might be as high as 50% in reality. I could go on a rant...

Universal coverage makes more sense to me than most alternatives. I think that has worked OK for the most part with Medicare. Extending it to all would make sense to me in the long-run.

Another old friend says:

At the law firm when I started there 7 years ago, we paid $20 a month for medical (hmo) and dental (100% covered plan). When I left this year, we were paying $30 a paycheck (or $60 per month)... and the deductibles had gone from $10 copay for doctors and $5 co-pay for prescriptions, to $25 co-pay for doctors and prescriptions.

At the LARGE company I am with now... it is even worse.

We pay $51 a paycheck.... and have a mediocre HMO to choose from.

The owner of a small insurance agency had this to say:

Regarding health benefits, I only provide coverage for [one employee] and not her dependents. The other two employees are covered by their husband's insurance. I assume we will continue paying her insurance at 100%.

Industrywide deductibles are going up and employees are being asked to contribute up to 40% of the premium. In some cases the premium for family coverage is $1600/month.

Employers can't keep up with the 20 - 30% increases they're getting every year.

A good friend and single mom who is holding down two jobs, school, and a teenager, responded to question #2 with this:

They just did [lower our benefits]...However, they did do one smart thing in the process, in order to keep costs down, they have single, single plus one (which works for domestic partners of either sex and single parents with one child).

I'm planning to give my own impressions of the survey results in a different post. (I want this one to stand alone, untarnished by my interpretations.) But I will end with a quote from a colleague and director at a high-tech Seattle-based company. The emphasis is mine:

I wouldn't consider reducing benefits because it's too hard to find great employees.