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Workers to face higher deductibles

Companies that offer health insurance foresee higher costs, report finds.

INDIANAPOLIS - Companies that offer employee health insurance expect another steep jump in medical costs next year, and more will ask workers to share a bigger chunk of the expense, according to a new PricewaterhouseCoopers report.

For the first time, most of the American workforce is expected to have health-insurance deductibles of $400 or more, the consulting firm said in a report released to the Associated Press.

The deductible is the annual amount patients pay out of pocket for care before insurance coverage starts. It is generally separate from copayments and coinsurance.

Two years ago, only 25 percent of companies participating in the annual survey said they asked employees to pay deductibles of $400 or more. That grew to 43 percent in 2010 and is expected to pass 50 percent next year.

Employees who are asked to pay more through items such as higher deductibles help keep the growth of costs in check because they tend to use the system less.

The health-care law that Congress passed and President Obama signed in March has just started to take effect and will have little impact on costs next year, said Michael Thompson, a principal with PricewaterhouseCoopers.

"In general, it's a continuation of a fairly high rate of medical inflation," he said.

The firm found that medical costs are expected to rise 9 percent next year. But that doesn't mean workers will see their monthly premiums jump by the same amount.

Employers typically try to soften the impact of a cost increase by absorbing some of it, changing insurance-plan designs, or asking employees to pay higher deductibles or a larger coinsurance percentage.

For instance, a medical-cost increase of more than 9 percent was forecast for 2009. But the average annual premium rose only 5 percent for family coverage that year and stayed flat for single coverage, according to a separate study from the Kaiser Family Foundation.

The 9 percent medical-cost increase projected in 2011 is actually slightly smaller than the 9.5 percent jump PricewaterhouseCoopers sees this year.

Thompson said several top-selling drugs will lose patent protection next year and become exposed to lower-cost generic competition. That will help temper the increase.