Healthcare Costs Increase in 2009 for Manufacturers

Compounding economic pressures, most U.S. manufacturers and distributors saw an increase in their health insurance premium. Although the average premium increase had been decreasing in previous years, the numbers are up again. The 2009 Compensation Data Manufacturing results showed the average premium increase was 9.6 percent for all plan types this year.

Comparatively, the average premium increase was 7.1 percent in 2008 and then, 11.4 percent the previous year. When comparing plans in 2009, 65 percent of organizations offering PPO plans saw an average increase of 9.3 percent. Those offering HMO and POS plans had average premium increases of 10.7 and 8.1 percent, respectively. HDHP plans had increases of 11.9 percent.

Medical plans continue to be a source of scrutiny, as high health insurance costs are cutting into organizationsÇ bottom lines, said Amy Kaminski, manager of marketing programs for Compdata Surveys. Organizations continue to search for ways to reduce healthcare costs, but often higher costs are passed on to employees.

To contain rising costs, U.S. manufacturers utilized a variety of methods. The most highly used was coordination of benefits at 83.1 percent in 2009, while a network of healthcare professionals was employed by 77.5 percent. Utilization reviews were prevalent, as 59.8 percent of organizations used them to contain costs.

The 2009 Compensation Data Manufacturing results showed 60.1 percent of companies increased the employee portion of the premium in their efforts to reduce costs. This is higher than the percentage seen in 2007. Currently, 44.2 and 24 percent of organizations increased deductible levels and employee co-insurance levels, respectively. On average, manufacturers and distributors contribute 10.6 percent of payroll toward the cost of health benefits, which is the same cost to provide all of the following benefits: dental, life, retirement, disability and other non-mandated benefits.