Oct. 29: This year's "open enrollment" season, when employees sign up for next year's health benefits, brings new costs, but it's not all bad news. The cost of group health insurance will be up 9 percent in the Bay Area, including San Jose. On average, workers will see their share of annual premiums jump to $2,063 and out-of-pocket costs climb to $2,423, according to an analysis by the national consulting firm Hewitt Associates. That's more the double the tab from eight years ago.
But President Barack Obama's health care reform means that workers will find new benefits, too. Young adult children can be added to family policies, lifetime limits on coverage will disappear, and many plans will offer free preventive care, such as colonoscopies.
And here's the surprise: The rising costs and added coverage are not closely connected. An analysis by the U.S. Department of Health and Human Services found that while health care reform has added to the cost, it is only by an additional percent or two. The initial set of consumer protections are popular with the public but not highly expensive to implement.
What is to blame? According to Hewitt Associates, a variety of factors are contributing to rising costs. Trends within the general population show increased use of costly medical technologies, more trips to doctors and hospitals, and a growing number of Americans with chronic conditions, such as asthma and diabetes.
Even the recession has an effect: Businesses are hiring fewer younger people, who are typically healthy. So it's harder to offset the costs incurred by older and sicker employees.
"The underlying factor that affects all health plan costs is the actual cost of delivering care," said John Nelson, spokesman for the Oakland-based insurer Kaiser Permanente.
This explains why the cost of medical care climbs even as wages remain stagnant. Eventually, health care reform could slow cost increases. Once the nation's 30 million uninsured are offered coverage, as required, the risk will be spread over a larger population. Many of these newly insured people will be young, and healthy.
It could also induce headaches and teeth-grinding at some businesses, because the reforms could make forecasting costs uncertain. Experts say that between now and 2020, when the legislation is fully implemented, there will be more than 1,000 rules and decisions that the federal government and employers will have to make.
On Monday, California launched its new federally funded high-risk health insurance pool for people with pre-existing medical conditions. These high-risk pools are designed to bridge the coverage gap until 2014, when the reform law prohibits insurers from denying coverage or charging higher rates to people with pre-existing conditions.
Most employees get their first glimpse of health care changes, and new costs, during the open-enrollment season, the corporate ritual every autumn that allows employees to select or switch their benefit plans for the following year.
These new plans will typically include new benefits because most employers must change their group health plans to include many of the changes that went into effect on Sept. 23. For the more common "calendar year plans," these changes are effective Jan. 1. Insurers, for example, are prohibited from setting lifetime limits on what they will pay for care, rescinding policies after a beneficiary becomes sick and excluding children with pre-existing conditions. Plus, children up to age 26 can remain on their parents' policies. Many, but not all, plans will also have to offer preventive care, including routine checkups.
In the Bay Area, the total health care cost to a business for each employee now averages $10,811, up from $9,914 last year, the Hewitt analysis shows.
How that translates to employees depends on how businesses handle this increase; some absorb the cost, while others shift it to employees through increased premiums, deductibles and co-pays.
Employees with the city of San Jose, for example, saw their 2011 semimonthly family premiums with Kaiser climb from $60 to $65 or $86 to $93, depending on their union membership.
At San Jose State University, retirees faced a 5.5 percent increase in their Kaiser policies -- and a 16 percent increase in their Blue Shield policies.
In the East Bay, University of California employees were told that if they wanted to continue their Alta Bates Medical Group coverage through Health Net, "they have to double their premiums," said professor William Drummond.