According to its press release, Hewitt says health care costs increased 9.2% for employers in 2005. It projects a 9.9% increase for 2006. Annual cost per employee in 2005 is $7,323, with projected cost per employee of $8,046 in 2006.
Employees continue to pay more for their health care, with the average employee contribution to health care premiums $1,366 in 2005, according to Hewitt’s data. It projects the average employee contribution in 2006 will be $1,612, representing 20% of overall health care premium. Out of pocket employee expenses continue to rise also as Hewitt’s data shows projected costs of $3,136 in 2006, up from $2,810 in 2005.
Hewitt says these cost increases for employees are offsetting salary gains. According to the release, an employee making $40,000 today, receiving a projected salary increase of $1,440, will use 23% of that salary increase to pay for the health care cost increase in 2006.
Traditional indemnity and Point-of-Service plans will experience the largest increase in 2006 (10.5% each), according to Hewitt. Preferred Provider Organizations and Health Maintenance Organizations will experience increases of 9.5% and 10% respectively.
Hewitt said employers are using several strategies to manage health care costs, including:
- offering consumer directed health plans
- contracting with plans that offer specialized or health risk management programs and focus on wellness and prevention
- requiring more quality data and price transparency
- changing prescription drug coverage.
The Hewitt press release is here .