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Still struggling in a lackluster economy, companies are pushing a larger portion of health insurance costs to workers, who will see their contributions to premiums rise an average of 23 percent, or $289, in 2004.
Meanwhile, company-paid premiums are projected to go up just 12.6 percent, according to an annual study of health insurance costs by Lincolnshire-based Hewitt Associates done in preparation for the 2004 open enrollment season.
"There has been no relief for employees," said Dave Fortosis, a Hewitt consultant responsible for the firm's Chicago practice. "I don't believe the employee share is going to diminish over the next few years."
Nationally, the average employee will pay about $1,565 in 2004. The increase for single people will be less than that for couples and families.
Workers with employer-based health insurance coverage are only now getting a glimpse of 2004 rate hikes as they enter the peak of the fall corporate ritual that allows employees to change their benefit plan offerings for the next year.
But it is already clear that the shift of health-care costs from companies to workers continues.
Nationally, workers are projected to pay an average of 22.3 percent of the cost of their coverage, up from 20.5 percent this year, according to Hewitt's study of 300 major employers with at least 5,000 employees and a database of 2,200 health plans with 16.5 million enrollees.
Employee contributions have doubled in the last five years while employers' health insurance costs have risen about 60 percent.
And it appears few employees are escaping the trend. Even workers who have not had to pay part of their health insurance premiums in the past are getting hit.
Grocery giant Albertson's Inc., the parent of Chicago-based Jewel Food Stores, has made increasing health-care contributions for workers a key issue in almost all of its 400 labor contracts across the United States, union officials say.
Two months ago Jewel, for the first time ever, negotiated health-care contributions from nearly 1,300 unionized workers responsible for sorting and distributing goods to Chicago area stores. Non-union employees have for many years contributed to the overall cost of the premium, the company said.
The union fought the change but said, in the end, that they were willing to pay a share given the soaring cost of medical-care services.
"It is a real trend and it is everybody's problem," said Jim Dawes, vice president of Teamster Local 710 in Chicago, which negotiated the contract on behalf of Jewel workers. "But when (the company) gets more in terms of contributions, that's less in the hourly rate that is available for contract negotiations."
Union and non-union employees alike are seeing cost increases wipe out a larger chunk of raises. In some cases, workers may actually be taking home less than they were before being given annual raises averaging between 3 and 4 percent, Hewitt figures show.
The rank-and-file are not happy about paying more.
"Health care is going to be a real nightmare for us," said George Selimos, a 53-year-old Jewel truck driver from Sandwich.
The new contract gives workers a 45 cent-an-hour raise in each of the first three years. Meanwhile, single union workers will pay $2 a week in the first year, rising to $6 in the third year.
Those with families will pay $6 a week in year one and $18 a week, or $936 a year, by year three.
Assuming a 40-hour work-week, the 45-cent an hour increase in the third-year would be negated entirely from the $18 a week employee share of the health-care cost increase for family coverage for that third year.
Workers say co-payments for drugs are also rising.
"It wipes out raises and some (workers) will even lose money because now the company can increase co-payments," said Selimos, who has family coverage for his wife and children. "There is not going to be much of a raise if you don't get any overtime."
Jewel said the cost increases for insurance for the 1,300 workers totaled $5.6 million over the next three years and that the company could no longer afford to pick up their entire tab for health care.
On average, Jewel said, employee contributions under this contract will now pay for only 3 percent of the total premium for the union workers with family coverage.
"It's a very small amount," said Tom Walter, vice president of labor relations and employment law for Jewel Foods.
Hewitt data show that large employers on average continue to pay the bulk of the premiums, but employees continue to contribute more. And it is likely to get worse.
"There are a lot of employers looking toward getting to a 25-percent to 30-percent cost share (from employees)," Fortosis said. "If the economy was improving more quickly, the march toward that 25 percent cost share wouldn't be so critical."
Elkay Manufacturing Co. in Oak Brook, Ill., a maker of stainless steel sinks and kitchen cabinetry, said it had to increase the workers' share of the premium for next year to stay competitive with rivals in the home improvement industry.
"We have to stay competitive with our pricing, and health-care costs continue to rise," said David Southard, Elkay's corporate director of compensation and health benefits. "The employee's share is at about 18 percent but we are trying to migrate to an 80-20 split. We are just getting in line with what is competitive."
Some employers are trying to hold down costs by offering additional wellness programs to reduce demand for health-care services while increasing education about lower-cost generic drugs.
For example, Elkay within the last year began paying for health screenings that test for about 35 different diseases and conditions at a cost of about $50 per employee. The testing, which includes drawing blood from workers, examines everything from cholesterol to heart disease and cancers.
"We are trying to make our employees aware of their health and early prevention," Southard said of the company's nearly 4,000 workers. "Staying well focuses on keeping them healthy and keeping our costs down."
Some other employers, particularly smaller companies that face annual rate increases of 20 to 30 percent or more, make workers pay a larger share of the premium, and are beginning to switch away from traditional health insurance such as HMOs or preferred provider organizations to so-called consumer directed health plans.
Such plans let employees or the company decide how much they want to spend on medical care, setting aside a defined amount of money to put toward medical costs. The money is put into a fund to pay for doctor visits and deductibles or co-payments for drugs.
Dollars that go unused can be rolled over into the next year. If funds are exhausted in one year, workers typically pay the bills until their next allotment.
Often, the employer keeps the contribution to the fund at the same level each year, which could result in the employee paying more if they spend all of the money in their account, insurance analysts say. Or, the company can keep money not used to reduce its premium in future years.
Critics say such plans are typically popular for younger and healthier groups of workers that are less likely to exhaust the money in their spending accounts. Critics fear such plans will cause people to put off medical treatments to avoid spending money in their accounts.
But Oak Brook-based Destiny Health, which sells defined contribution plans, said more than half of employees in its plans have money to carry over in future years. Most of its clients are small businesses with less than 500 employees.
"That money can be used to offset employee costs," Destiny Chief Executive Ken Linde said. "(Employees) have to become aware of the costs."
Defined contribution has kept costs under control for Chicago-based multimedia production company TeamWorks Media Inc. and its 15 employees, most of whom are under 40 years old.
"They create an incentive for everyone participating to stay healthy," said Tom Smithburg, TeamWorks chief financial officer. "We have always benefited from the personal medical fund concept because it has allowed Destiny to increase our premiums well below the national average. Our increase is under 8 percent."
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(c) 2003, Chicago Tribune. Distributed by Knight Ridder/Tribune News Service.
