Health Costs to Rise, Mercer Survey States

“For many employers, an increase of this magnitude – four times the rate of general inflation – is painful to consider,” says Blaine Bos, spokesperson for the Mercer survey, in a press release. “And some just aren’t going to sit still for it.” Although projected cost increases for stagnant plans would be 13%, Mercer believes that due to plan restructuring, the increase will only be at 9.6% per employee.

The survey has lead Mercer to predict that more costs will be shifted to the employee next year. “The difference between employers’ cost projections before and after making changes to their benefit programs suggests we’re going to see some considerable cost-shifting to employees next year,” Bos stated in the release. “In fact, the actual cost increase for 2005 may come in even lower. After the cost hikes of the past few years, employers and health plans may be choosing to estimate conservatively, despite the cooling trend in health care spending.”

The projected cost increase varies only slightly with regards o employer size. The average increase among the smallest employers (10-49 employees) is 10.4% (down from a 13.4% increase before any plan restructuring), while the largest (20,000 employees or more) predict an increase of 9.5% (down from 11.4%.

The survey data presented by Mercer is only preliminary. It is based on 916 employers who responded by Aug. 24, while the final survey, due out at the end of the year, is expected to have over 3,000 respondents.