Will Employer Based Health Care Benefits Decline in the Next Ten Years?

Vanessa Fuhrmans of the Wall Street Journal reports that research indicates that trend in employer paid health care benefits may decline over the next 10 years.

"The 30% plunge in health insurers’ shares in recent weeks is an index of how seriously Wall Street believes President Obama’s health-reform agenda will ultimately upend private-sector insurance. Now comes a pair of surveys that indicate more of Corporate America anticipates the end of health-care benefits as we know them, too.
According to a survey of 489 large U.S. employers out today, 62% said they were confident they would still be offering their workers health coverage 10 years from now, down from 73% last year. The economic crisis one reason for the drop; the prospect of a new and much different health-insurance system was another.
“This is the first time in the 14 years that we have conducted this survey that employer confidence declined, and it is not related to an increase in cost trends,” said Ted Nussbaum, a director at Watson Wyatt, an employee benefits consulting group, which conducted the survey with the National Business Group on Health.
A employer poll released last week by Hewitt Associates, a rival consultancy, echoes the sentiment. Though the majority of the 340 big employers surveyed had no immediate plans to change their health coverage strategy, one-fifth said their aim is to move away from directly providing health benefits in the next three to five years — up from 4% in 2008 and none in 2007."

WellPoint Increases Its Profits By Increasing Premiums

In today's Wall Street Journal, Sarah Rubinstein reports on the growing trend of health insurers....raising premiums in order to boost profits. Is there light at the end of the tunnel?

"The high cost of health insurance has aggravated patients and employers and generated plenty of debate on the campaign trail. But there’s one constituency that tends to stomach price hikes just fine: investors.
One giant health insurer that’s certainly aware of the phenomenon is WellPoint, which has seen its profits drop 17% so far this year after underestimating how quickly health-care costs would rise. In an attempt to regain investor’s confidence, CEO Angela Braly has been boosting the monthly premiums that customers have to pay for WellPoint’s plans — in some cases quite a bit.
The result: In the first six months of the year, WellPoint lost 189,000 members in the business and individual plans that it insures, the WSJ reports this morning. The company projects an additional overall 150,000-member decline by December. Other corporate clients are shifting more of their costs to employees, to lessen price increases. Meanwhile, WellPoint’s share price has recovered somewhat since it plunged after the company cut its earnings forecast in March, but it’s still off around 40% this year.
Kenneth Goulet, head of WellPoint’s commercial-business division, says it would be irresponsible to set premiums that cut deep into margins or lose money. “That’s not sustainable,” Goulet says. “We’re developing products that meet the needs of customers, then pricing them with very good discipline.”
The WSJ notes that the conundrum of how to reassure investors that profit will be maintained without losing business is confronting the entire health-insurance industry. Other major insurers that have reported enrollment losses in employer plans since the first quarter include UnitedHealth Group, Health Net and Coventry Health Care."