Employer Health Care Costs Increase More than 7% in 2009

March 22, 2010 (PLANSPONSOR.com) - Average healthcare costs for U.S. employers increased 7.3% per capita in 2009, according to an analysis of medical claims data by Thomson Reuters.

The 7.3% spike experienced by U.S. employers means their net health care payments for active employees increased from $3,113 to $3,341 in 2009. Thomson Reuters said the increase is particularly striking given that the overall U.S. inflation rate, as measured by the Consumer Price Index (CPI), declined by 0.4% in 2009 — which was the first time since 1955 this index has seen an annual decrease.       

Health care inflation hit small and midsize companies twice as hard as it hit large employers in 2009, the analysis found. Among small employers (less than 5,000 employees), health care costs increased 9.8% in 2009, nearly double the 5% rate seen in 2008, and medium-sized employers (5,000 to 50,000 employees) saw costs increase from 6.5% in 2008 to 10% in 2009.      

Among large companies (more than 50,000 employees) costs rose 5% in 2009 – a decrease from the 5.8% recorded in 2008.      

Other findings of the analysis include:

  • Medical costs Per Member Per Year (PMPY) accelerated 8% in 2009 — an increase from the 6.8% rate seen in 2008.
  • Pharmacy spending increased 4.3% in 2009 — up from a 3.4% increase in 2008 despite a continued shift to generic drugs and the absence of new blockbuster brand drugs in 2009.
  • Net inpatient medical costs increased 4.7% to $852 per capita in 2009 – driven by a 6.8% increase in the per capita cost of a hospital admission and partially offset by a 2% decrease in the number of admissions per 1,000 individuals.
  • Outpatient net costs increased by 8.7% to $1,824 PMPY in 2009 and reflect relatively equal increases in the use and price of health care services. Outpatient services per 1,000 members increased 4.8% and net pay per outpatient service increased 3.8%.
  • In 2009, allowed ER costs increased 11.6% to $133, reflecting a slight increase (0.5%) in ER visits per 1,000 members and an 11.1% increase in cost per visit.


A copy of the full results is here.