Expect higher health care costs this enrollment season

Chris Harkness has worked in Minnesota public schools for more than 20 years. In all that time she has never paid anything toward her employer-sponsored health insurance premium -- until this fall.

"We are now all having to pay something for our single coverage, and the people who have family coverage are having to pay an astronomical amount every month," Harkness said.

Harkness, who lives in St. Paul, knew her employer was struggling to keep up with health care costs. It has been a regular discussion topic in her district.

She held out hope that her bosses would find a way to preserve her benefit without asking her to help pay for it. But in August, the district said it couldn't absorb the increases on its own anymore.

"I wasn't surprised totally, but a little disappointed," said Harkness.

Harkness now pays $60 a month for her health insurance. She knows that's not as much as many people with employer-sponsored coverage pay. But it has eaten up most of her 2 percent raise, and she says what's left of her raise probably won't make up for her expected property tax increase this year.

In Lakeville, Janet Keller is just starting to look over her insurance options during 3M's open enrollment period. Keller and her husband are on the company's retiree plan.

3M is known for its great benefits, she says. But this year her coverage doesn't look as good either.

"We're paying a lot more than we have before."

Keller estimates her family's bill will increase by $200 a month. She's lucky she and her husband have other sources of income.

"We're not retired, we're still working. But if we were truly retired and not working, that would be taking a large part of our pension," Keller said.

It's still too early to tally officially what most employers are doing with their health plans this year. That information won't be available until January or later.

But of among those who have already presented their plans, the trend is to make employees spend more of their own money first, benefits expert Paul Fronstin says.

"In 2008, there appears to be a pretty significant bump in deductibles. And that really isn't related to any weakness in the economy. It's more related to employers and insurance companies trying to manage cost increases," Fronstin said.

Fronstin works for the Employee Benefit Research Institute. A recent survey by his organization found that 55 percent of respondents with coverage reported higher health care costs in the past year.

Many of those same people also reported that the increases meant that they contributed less to retirement and other savings.

The weak economy will only add to those problems. Employees probably won't notice the fallout from that until next year, because employers are more or less stuck with what they're offering now, Fronstin says.

"It's almost too late to make changes. Or at least, it's almost too late to make major changes."

Small businesses are the exception. Many of them could decide to simply drop their coverage, he says.

There hasn't been any evidence of that happening yet. In fact, last year there was a slight increase in the number of small employers who offered health care benefits.

"Unemployment in 2007 was relatively low. We were below 5 percent, I think, for most of the year," said Fronstin. "And as a result, employers knew that they had to offer good benefits to be competitive in the labor market."

But unemployment has climbed to more than 6 percent and it's projected to grow in the coming year.

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