As health reform grinds unevenly into congressional recess, employers are not waiting on Washington. Though they’re watching intently for reform to regain traction, life must go on and for many that means a continued shift of health insurance and prescription drug costs to employees, experts postulate.

“From an employer point of view, I would say for 2010 the trends are going to be the same regardless of whether health reform passes or not,” says Tom Billet. Billet expects to witness increased cost sharing, with an upswing in deductibles and coinsurance and an increase in payroll contributions for employees. He also predicts the emergence of more account based plans, such as HSAs, as an option.

Because employers aren’t sure what direction the reform winds are blowing, they’ll continue to steer straight ahead in the meantime.

“There are still some employers who are skeptical of whether this is going to happen, you never know with Washington. In the short term anyway it’s pretty much business as usual. Given the environment, I expect we’ll see increased co-pays and increased cost sharing at point of service as well as increased contributions. Typically, it goes up every year anyway so I wouldn’t be surprised if it goes up more than it has in the past,” says Mark Olson of Towers Perrin.

According to Towers Perrin’s annual Health Care Cost Survey, average health care costs rose by 6% in 2009 and despite the rate of growth remaining on par, employers and their workers faced record-high costs this year. In flat dollar terms, gross health care expenditures rose by an average of $532 per employee, to an average total cost of $9,552.

Carrier quotes for the 2010 plan year will soon be rolling it, and while percentage hikes appear unlikely to crack double digits, experts are reluctant to offer any guesses at benchmarks. Those will roll up in late September/early October, with the release of highly regarded studies such as Towers Perrin’s Health Care Cost Survey and Kaiser Family Foundations’ Employer Health Benefits Annual Survey.

Whether or not health care costs continue in this upward stream, Olson expects that employers will retain and expand the already popular wellness programs in an effort to further curb health expenditures. What’s more, many employers will reward healthy lifestyles with financial incentives like cash or lowered premiums. There will also be more focus on biometric screening as “an emerging phenomenon” to monitor chronic diseases, he says. “I’m sure we’ll see more of this in the future,” adds the Principal and consulting actuary at Towers Perrin.

In addition, Olson predicts a concerted effort to reduce prescription drug costs by pushing generics, whose utilization rates are close to 70% for most companies, says Olson. He’s also seeing employers try to lessen the price of specialty drugs, which has been escalating by close to 20% over the past couple years, Olson explains. He also predicts a shift to coinsurance, instead of fixed dollar co-pays for prescription drugs.

Spending money to save money

While employers skimp and save, Josh Bivens, an economist at the Economic Policy Institute, believes the Fed should expend additional capital in order to rectify a broken health care system.

“The assumption by [CBO director Doug] Elmendorf—that health reform’s primary goal must be to reduce the growth of federal health spending—is tailor-made to block reform. It should be rejected,” says Bivens.

Bivens points to federal spending as the key to curb rising health care costs and deliver care efficiently. Juxtaposed to other developed countries, the U.S. spends the most on health care per capita, yet its share of total spending by the government is by far the smallest.

Another example proffered by the EPI economist for the need for Federal spending, is a comparison in spending of the federal Medicare program versus comparable services provided by private insurers. He finds that Medicare has reigned in costs more successfully over time. He estimates that if private sector health costs had been managed as effectively as Medicare, family health insurance policies today would cost Americans roughly $7,000, most likely in higher taxes, as compared to the $12,400 they pay today in insurance premiums.

In an effort to understand the impact health reform will have on total health spending, Bivens examines three less-publicized reform proposals from legislators that have also been analyzed by the Lewin Group, a private, non-partisan consulting firm.

Americare was introduced by Rep. Pete Stark (D-Ca.) as a single-payer option plan. This plan results in close to $200 billion in Federal health spending, but would largely depreciate the total health spending. As a result of this plan, Americans would see higher taxes, but would pay less in premiums and co-pays and out-of-pocket spending. The bottom line result, Bivens says, “would be higher take-home income.”

Rep. Mike Enzi’s (R-Wyo.) Ten Steps for America plan would constitute a large tax cut from the get-go. Further the Federal government would not fund care directly, save a direct increase necessary for the uptick in the Medicare population. In contrast to Americare, Rep. Enzi’s plan would increase total spending in its debut year, according to Lewin.

The Commonwealth Fund’s Building Blocks plan (similar to the House’s hybrid plan and the Health Care for America plan put out by the Economic Policy Institute and Jacob Hacker) would foster a net total health spending of less than $18 billion in order to cover the 47 million previously uninsured Americans. According to Lewin, this plan would increase federal spending, while American households and businesses would experience large reductions in spending.

For these reasons, Bivens concludes that one “must spend money to save money.” But for now, stuck in the mire of legislative debate, employers will have to make due without the invisible hand by shifting costs to their employees and boosting interest in wellness programs and generic prescription drugs. Change may come, but not in the immediate future and right now that’s about as far as the American company can see.