Health Insurance Daily

Employers Still Feel Pressure Of Medical Costs

Health care costs are projected to rise by 6% in 2007 for U.S. employers, which is two-thirds higher than the Consumer Price Index. Next year’s total health care expenditure is expected to rise by an average of $518 per employee to an average total cost of $8,748. This increase “will exert significant pressure on businesses striving to maintain adequate coverage for their employees,” the consulting firm says.

“While it is good news that 2007 represents the fourth year of declines in the overall average rate of increase, it is definitely not a signal that the pressures are abating or that companies can sit back and expect to continue their downward trend,” says Dave Guilmette, managing director of Towers Perrin's health and welfare practice. Medical costs have increased by over 60% during the past five years, the survey found.

Survey results indicate that employers have succeeded in halting the double-digit cost growth characterized in the late 1990s and early 2000s. Towers Perrin estimates next year's projection would have been closer to 8.5% if employers hadn't aggressively managed their programs.

A separate survey by Buck Consultants also concluded that health care inflation is decelerating. It found that PPO premiums increased 10.9% this year, down from 12.7% last year, and HMO costs grew 10.8% this year, down from 11.8% last year. Prescription drug cost trends are at their lowest level in seven years. They grew 8.2% this year, down from 11.1% last year.

Article provided by BenefitNews, October 3, 2006.

posted by Mike @ 7:40 AM