Healthcare Hikes May Hit Employees in 2001

December 12, 2000 ( - Employees may have to pay more of rising health care costs next year, tight job market or not, according to a new survey.

About 40% of employers in the survey by William M. Mercer said they will increase their employees’ contribution levels in 2001, while 17% will raise deductibles, copayments or out-of-pocket maximums.

Large employers – those with 500 or more employees – are the most likely to shift the rising cost to employees, with 58% saying they will raise employee contributions, according to Reuters.

Highest Rate Since 1992

The average cost of health care is expected to rise by 11% next year, the largest increase since 1992, according to the survey. The increase comes on top of an 8.1% increase this year. In 1998 and 1999, the rates rose by 6.1% and 7.3%, respectively.

The average health care cost per employee rose to $4,430 in 2000 from $4,097 in 1999, the third straight year that increases were more than double the rate of general inflation.

Retiring Minds

The number of large employers offering medical care for retirees not eligible for Medicare fell to 31% this year from 35% in 1999. The number of employers offering coverage for Medicare-eligible retirees fell to 24% from 28% a year earlier.

The Mercer survey also showed that for the first time in seven years, the cost of health maintenance organizations (HMOs) rose more sharply than preferred provider organizations (PPOs), in 2000 – by 9.6% versus 7.7%.

The survey polled 3,300 public and private employers in the U.S. with 10 or more employees.