Double-Digit Health Care Hikes Challenge Plan Sponsors

January 24, 2001 ( - Health care costs are expected to rise 10.3% for large employers, led by prescription drug hikes of 14.6%, according to an upcoming survey.

The pace of cost increases across plan types suggests that managed care is having a diminished impact on cost control.  The average premium cost increases for 2001 are projected to be:

  • 10.5% – Health Maintenance Organization (HMO)
  • 9.6% – Indemnity       
  • 9.6% – Point of Service (POS)
  • 9.1% – Preferred Provider Organization (PPO)

However, despite the beginnings of an economic downturn, “most employers will be reluctant to ask workers to shoulder more of the cost increases, as this may threaten their ability to attract and retain talented workers” according to Rich Ostuw, global practice director of group benefits and health care consulting at Watson Wyatt.

Benefits Management

Watson Wyatt offers the following suggestions for human resource/benefits managers:

  • Modernize your approach to benefits – evaluate the overall program, not just incremental changes.
  • Rationalize the use of managed care – rather than a one-size-fits-all approach for all employees. Demand nothing but the best from vendors – cost and service management is key to maintaining employee satisfaction with these programs
  • Tackle preventable health problems head-on – put more emphasis on disease management and preventative treatment approaches
  • Utilize all resources to gain maximum results

The survey of 360 large employers was conducted jointly by Watson Wyatt, the Washington Business Group on Health and the Healthcare Financial Management Association.  It should be published in March.