For many employers, rising medical inflation produces tension between the need to control health benefit costs and a desire to protect their employees from large medical bills. According to new reports from the California HealthCare Foundation, most California employers believe that increased cost-sharing will make employees more savvy consumers of health care and reduce unnecessary utilization. At the same time, many employers are concerned that greater cost sharing will reduce necessary care and negatively impact employees with chronic conditions.

Despite the rising costs, few employers, nationally or in California, intend to fundamentally alter their health benefits; less than 10% of firms surveyed are considering dropping coverage for employees or dependents. However, additional cost-sharing is planned. For example:

• Two-thirds (66%) of California employers are likely to increase employee cost-sharing in the next two years.
• Three in five (62%) plan to increase premium contributions for dependents, while half (54%) expect to increase contributions for employee-only coverage.
• Nearly three in ten (28%) plan to reduce the scope of covered benefits.
• One-quarter (25%) plan to move toward a contingent workforce (part-time or temporary) without health benefits. Recent surveys conducted by Harris Interactive® for the California HealthCare Foundation (CHCF) examined the impact of health insurance market changes for California employers and consumers.

  According to Jill Yegian, CHCF senior program officer, "When health insurance premiums began to climb in the late 1990s, the tight labor market prevented employers from cost-shifting to their employees. But as unemployment has grown and corporate profits have fallen, employers across the nation and in California have begun to shift a greater share of health care expenses to employees." One brief report (Health Benefit Costs: Employers Share the Pain) focuses on how employers are altering their health benefits to deal with these escalating costs.

  Key California findings from this analysis include:
• Employers expect health benefit costs to increase 14 percent on average in 2003.
• Nearly all (88 percent) employers interviewed agree that, "Health care premiums will increase at double-digit rates for at least the next three years."
• A majority (53 percent) of employers offering health insurance describe their health benefit costs as "out of control," a slightly higher proportion than employers nationwide (48 percent).
• Employers with fewer than 100 employees are three times as likely as large employers (1,000+ employees) to say their health care costs are totally out of control. Overall, California employers are responding to the market similarly to U.S. employers as a whole, but are less likely to have increased employee cost-sharing in last year. Additionally, California employers are less likely to plan an increase in employee premium contributions in the next two years.

  A second report (Ready or Not: Consumers Face New Health Insurance Choices) focuses on California consumers, including Californians with a chronic illness, and the impact of health insurance changes on their behavior and decision-making.

  Of note is that increased cost-sharing alters care-seeking behaviors, especially among those with lower incomes and those with greater health care needs. Low-income, chronically ill Californians were about three times as likely to postpone or skip a doctor appointment or fail to fill a prescription in response to increased cost-sharing as the overall population of insured Californians.

  As consumers take on more financial responsibility for their health benefits, they play a greater decision making role in the selection of their care. However, the level of knowledge or confidence California consumers bring to health care decision-making varies with income. Findings from the analysis include:
• Lower-income consumers are somewhat less likely to see quality ratings and less likely to discern quality differences among the health care choices available to them, compared to those with higher incomes.
• Knowledge of health plan restrictions falls sharply as income decreases.
• Californians with lower incomes expressed less confidence in their ability to make health benefit decisions based on their understanding of common health insurance terms. In addition to the two reports, chart packs were produced. They feature views of the health care system; health benefits; satisfaction with and knowledge of health benefits; employer response to rising costs; consumer response to changing health benefits; financial burden of paying for medical care; consumer activism; quality initiatives; disease management; and the chronically ill.

  The reports are based on a telephone survey of California employers; a telephone survey of California consumers aged 18 and over; and an online survey of Californians with a chronic illness.

  About Harris Interactive

  Harris Interactive (www.harrisinteractive.com) is a worldwide market research and consulting firm best known for The Harris Poll®, and for pioneering the Internet method to conduct scientifically accurate market research. Headquartered in Rochester, New York, U.S.A., Harris Interactive combines proprietary methodologies and technology with expertise in predictive, custom and strategic research. The Company conducts international research through wholly owned subsidiaries-London-based HI Europe (www.hieurope.com) and Tokyo-based Harris Interactive Japan-as well as through the Harris Interactive Global Network of local market- and opinion-research firms, and various U.S. offices.