Health insurance costs for business expected to rise 9% next year

by Lesley Politi on June 24, 2009

This is exactly what Business owners don’t need. I have heard of many employers dropping the health coverage for their employees to try to keep their business open.


The U.S. economy experienced its worst contraction in 25 years.  Despite this down turn in the economy,  health insurance costs for U.S. employers are expected to rise 9%.   This is  actually a slight improvement over the increases reported in 2009 and 2008   As in everything to do with health insurance this will vary by state. California reported lower projected increases averaging under 5% but Florida was right on the 9% number.

Over the last 5 years, health insurance has seen mostly double digit rate increases. Pricewaterhouse Coopers reported that health insurance premiums increased 4 times faster than wages.  This has been especially hard on small business owners whose rates rise faster than the rates of larger companies.

42% of employers surveyed said they expected to increase the employee’s share of health insurance costs. Some would try to control the increased cost by modifying plan designs.  Few employers believe that offering wellness and disease management programs do anything to decrease overall costs of group sponsored health insurance

Employers are continuing to look at high deductible health plans with Health Savings Accounts to help control  costs.   20%  of employers surveyed said they would add a HDHP and HSA as an option for their employees over the next 2 years.

One bright spot in this year’s report  is the decrease in the growth rate of prescription drug costs. Spending for prescriptions has gone down, in large part because of the increased use of generic drugs.   In 2010, five of the most prescribed drugs will go off patent.  More will go off patent in both 2011 and 2012.   The Center for Medicaid and Medicare services has reported that in 2007,  67% of all prescribed drugs were generic.

The market is suffering a Catch 22. Health insurance companies are seeing revenues decline because of the number of people losing their employer sponsored health insurance. But more people cannot buy health insurance as they lose their group coverage because of medical underwriting and cost.


At least us in California are keeping the average rate increase under 5%!!! I keep coming across more people who lose their jobs and can’t afford COBRA so they do need to go on an Individual plan, which is the less expensive way of getting insurance. The problem is getting individuals approved.


Questions Please Call Politi Insurance Agents & Brokers


Leave a Comment

    Previous post:

    Next post: