Employers Continue To Absorb Rising Healthcare Costs

November 21, 2001(PLANSPONSOR.com) - Average health plan premiums are expected to climb in 2002 - by over 15% for sponsors of fully insured plans, and by 11% for those with self-funded plans, a new survey by UBS Warburg finds.

And while that trend is expected to continue into 2002, with 93% of the sample expecting further premium increases, most employers still say they will not be passing those costs onto employees:

  • almost 73% said that they would not be raising premiums,
  • only 15% plan to increase premiums for workers, and
  • the remainder, 12% were unsure

Based on the survey results, UBS Warburg projects that workers share of premiums will reach 21.4% for 2002 from 17.5% this year. In the past, employees? contributions have been as high as 28%.

Market Shuffle

Results also suggest that the trend towards the three-tiered co-payment system for prescription drugs will continue, with three-tier member penetration expected to rise to 64% next year, compared to 55% in 2001. Some 22% of the sample plans to move more employees to this system.

Preferred provider organization penetration increased its market share from 36.8% in 1999, to 42.5% in 2000 and 46.9% for 2001.

On the other hand, survey results show that health maintenance organization or point-of-service plan penetration fell from 49.1% in 2000, to 46.3% in 2001.

                

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