By John Byczkowski
The Cincinnati Enquirer

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• Health insurance premiums v. coverage

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• 2003 Annual Employer Health Benefits Survey Complete details of the survey by The Kaiser Family Foundation and the Health Research and Educational Trust.

Tristate workers face higher health-care costs and new choices for 2004, as employers scramble for ways to hold down rising premiums.

Employers' health-care costs rose 13.9 percent nationally this year, the biggest jump since 1990 and third consecutive year of double-digit increases, according to a Kaiser Family Foundation study released Tuesday.

Those kinds of increases are pushing employers throughout Greater Cincinnati to look at new insurance options.

Staring at an increase in health-care costs of as much as 30 percent, Hamilton Caster & Mfg. Co. in Hamilton for the first time will ask its 24 salaried employees to pay part of their health insurance premiums. This spring, when Hamilton Caster heads into negotiations with the union for its 40 hourly workers, health-care costs will be a major topic of discussion.

"We're just a little microcosm of a huge national problem," said Steve Lippert, the company's executive vice president. To the employee, "the employer looks like the bad guy, because we're raising premiums. The reality is we're both caught in a national squeeze."

At General Electric, for example, if you have a large family, coverage is going to cost more beginning in January than if you have a smaller family. Officials at GE, a company that includes GE Aircraft Engines in Evendale, don't know the details yet.

Humana Health Plan of Ohio Inc., one of the area's largest health-insurance providers, said claims costs rose about 17 percent from a year ago. The city of Cincinnati budgeted for an 8 percent increase this year and 12 percent in 2004, Finance Director Bill Moller said.

Employers are now determining the coverage they'll offer for 2004, and Tristate workers will have to choose their coverage during open-enrollment periods this fall. Some employers are going so far as to charge extra for working spouses who decline coverage at their own employers.

"They're looking for just about anything to help relieve some of the cost increases," said Sharron DiMario, president of the local Employer Health Care Alliance.

The Kaiser study found employees' costs are rising as well. Employees pay $201 a month, on average, for family coverage, up 13 percent from 2002 and up almost 50 percent from 2000. Singles pay $42 a month, up about 7 percent from 2002.

The problem for workers is that their health-care costs are rising faster than their pay.

"You cannot get a pay raise to cover the cost of your insurance," said Jim Reed, secretary-treasurer of Teamsters Local 100, which represents about 4,200 workers at more than 100 local companies. "They get a 4-5 percent pay raise, but actually lose money because their insurance is going up."

Health-insurance costs are a major topic in almost all contracts the Teamsters negotiate locally, Reed said. At one local company, Teamsters are paying $340 a month for family coverage.

"If it keeps on going the way it is, I don't know if anybody will have insurance, or we'll be paying a bunch for it," he said.

But employers don't appear to be dropping coverage. About 66 percent of companies nationally offer health benefits, the same as last year, but down from a pre-recession high of 69 percent in 2000. "Even though rates continue to increase ... employers are not abandoning health care. To me that's really good news," DiMario said.

But coverage comes at a price. The Kaiser study found employers are likely to ask employees to carry more of the load - paying more of the insurance premiums, raising deductibles, and raising co-pays on prescriptions and office visits.

Some employers are restricting coverage on their employees' spouses, a maneuver called "spousal carve-outs." They add a surcharge if an employee's working spouse declines coverage from his or her employer. "Why employers do this is that they feel they're paying 80 percent of another employer's cost," said Linda Ruth, senior health care strategist for Hewitt Associates consultants in Chicago.

DiMario said spousal carve-outs aren't common in Cincinnati, and Ruth said employees hate carve-outs so much that few employers are doing it.

What's becoming popular are "high-deductible" plans, also called "consumer-driven" plans. These are plans where workers pay the first $1,000 or more of their medical expenses before coverage kicks in.

There are several models, but Ruth gave this example: An employer gives each of its employees money to cover the first $1,000 of medical expenses. After that's spent, each employee covers the next $1,000 of medical expenses. When expenses reach $2,000, insurance kicks in, with employees paying some of the cost.

These plans are called consumer-driven because they force employees to think about how they spend that $1,000 - which doctors to see, which drugs to take. Kaiser found that just 5 percent of all companies offered these plans, but they were offered by 17 percent of companies with 5,000 or more employees.

Ruth said many employers are showing interest and "the employees that enroll in those plans really like them." Employees get lots of choices, lots of "decision support" from Web-based tools and telephone hot lines; and what they don't spend rolls over to the next year.

E-mail johnb@enquirer.com