Posted on Sun, Nov. 10, 2002
Larger healthcare deductions make some workers ill
Many employers here pass costs on
BY JOHN DORSCHNER
jdorschner@herald.com
Many South Florida employees are facing a new kind of sticker shock: dramatically larger medical insurance deductions from their paychecks.
Workers at Florida Power & Light will be paying 70 percent more next year. Miami-Dade County Public Schools employees with families will see their payments double.
They're all suffering from the latest healthcare trend: Because many firms are being hammered by soaring insurance costs in a down economy, they're asking employees to pay a much larger share of the cost.
Those who get hit the hardest are those with the lowest incomes.
Prime example: Eva Reyes, a school bus driver in Miami-Dade County. Working 10 months a year, with a biweekly paycheck of $800 before taxes, she's facing a deduction of $383 per check for family insurance next year. ''They're squeezing us to the maximum,'' she said.
Reyes plans to drop her son from coverage but insure her husband, which will reduce her paycheck hit to $197 -- still a big bite for a small income.
Employees all over are feeling the pinch. A survey of 38 South Florida businesses by Aon Consulting found that two-thirds of the companies plan to ask their employees to pay more.
Nationwide, employees can expect their own medical expenses to go up 20 percent, says Ken Sperling of Hewitt Associates, the consulting firm. That includes what's taken out of their paycheck and larger co-payments for medical services.
Many employers say higher co-payments cause employees to make themselves more aware consumers.
Others doubt such rhetoric. ''They're not after awareness,'' said Santiago Leon, a Miami healthcare insurance specialist. ``They're after cost-shifting.''
Many employers have felt they have absorbed all they can of soaring healthcare costs.
Rapidly rising prescription drug charges, improvements in technology -- such as patients getting sophisticated scans rather than X-rays -- and increasing hospital charges, particularly for outpatient services, have sent costs charging upward.
Hewitt Associates reports that this year and next, employer-based healthcare costs will jump 29.1 percent. In 1998, firms paid $3,692 for each worker's insurance. Next year, that figure is expected to rise to $6,295.
At present, according to the Kaiser Family Foundation, which specializes in healthcare research, the average single worker nationwide is paying $38 a month, or 15 percent of the total of insurance.. Those with families are paying $174, or 26 percent of the total.
With a tight labor market making it difficult to find another job, many employers are asking workers to take what amounts to a pay cut without fear of losing staff.
'Many are hearing about the new increase for insurance, and they're saying, `That's it? I can still come to work Monday?' '' said Sperling of Hewitt. ``They're happy to have a job.''
SMALL BUSINESS
Those hit hardest work for small businesses, such as Apricot Office Supplies of Broward County. Co-owner Marlene Bernard says the firm used to pick up all costs for an employee's individual insurance, and the worker paid all of the family portion.
But facing a 30 percent insurance increase in a difficult economy, Apricot now asks employees to pay 25 percent of the premium. Only one has opted for family coverage -- going from $520 a month this year to $796 next year.
''It's really gotten out of the range of affordability,'' said Larry Johnson, the employee who will pay the higher tab to cover his wife and three children.
Some large South Florida employers have chosen to keep co-pays and deductibles the same next year, but raise premiums. The Herald is among them. Those with family plans are paying 20 percent of health costs this year; next year they'll pay 30 percent. That means Herald workers with families will see their $104 deduction per month double next year to $208.
Miami-Dade County employees with families will pay an additional 19 percent for the Humana and Jackson HMOs next year. They'll see $142 to $224 taken from their paychecks every two weeks.
Meanwhile, state employees are comparatively better off. For the statewide PPO, workers will be asked to pay 13 percent more next year -- $42 a month for individual coverage, $151 a month for a family.
Miami-Dade school workers are in a tougher situation. Their cheapest HMO this year, Cigna, demanded a huge increase for next year. Vista, another HMO provider, also wanted large increases, and the School Board decided it was best to drop them and give all coverage to UnitedHealthcare POS.
The upshot is that lower-paid employees with families could see huge chunks of their paychecks going to insurance.
Consider Claretha Allen, a Miami-Dade Public Schools office worker with two children. With a biweekly check of $570 after taxes, she is facing a $128 deduction for healthcare, and another $65 for the enhanced dental plan because her daughter has braces, not to mention the $170 she pays biweekly for child care.
''I just can't afford this,'' Allen said of the insurance. Next year, she will become another of the 10 million people who are offered health insurance in the workplace but can't afford to take it, according to the American Association of Health Plans.
Some companies, like FPL, were able to contain costs for quite a long time by using managed care contracts. ''We have not been very aggressive in what we charge employees,'' said Jane Lohmeier, FPL benefits manager.
That's changing next year. The firm has launched an employee-information campaign to explain why the average employee will see a 70 percent increase in what they pay.
CREATIVE STRATEGY
Other employers have used creative measures to limit premium increases. The University of Miami continues to pay about 75 percent of insurance, with employees picking up the rest. More than half the university employees will pay no more next year, thanks to some moves by benefits administrator William J. Walsh.
Besides added co-pays, he has come up with new rate categories, such as employee-plus-child, which is cheaper than employee-plus-spouse and better fits the needs of many single parents.
The university is also trying to lead staff members away from outpatient services at hospitals, by increasing co-pays there, and offering testing with no co-pays at free-standing facilities with much cheaper prices. ''We need to educate our employees,'' Walsh said.
Still other firms plan to continue picking up the whole tab. ''We're like a family,'' Ruchel Louis, president of Successful Images in Fort Lauderdale, said of her eight employees. ``I came from South Africa, where only 10 percent had health insurance. We don't want to be like South Africa.''
For many employees, this is likely just the begining of the pain.
''Unless there is a fundamental change in the way healthcare is delivered,'' warned Jack Bruner of Hewitt, ``costs will double in the next five years.''
Herald staff writer Angel Doval contributed to this report. |
