Hewitt: Health Cost Increase to Go Up in 2008

September 24, 2007 (PLANSPONSOR.com) - Health care rate increases fell to 5.3% in 2007, down from 7.9% in 2006, but are expected to increase to 8.7% in 2008, according to a Hewitt Associates survey.

The average health cost per person for major companies will increase from $7,982 in 2007 to $8,676 in 2008 and the amount employees will have to pay will increase by 21% from $1,690 to $1,859.

Average employee out-of-pocket costs, such as co-payments, coinsurance and deductibles, are also expected to increase from $1,576 in 2007 to $1,738 in 2008. Overall, employees total health care costs including employee contribution and out-of-pocket costs are projected to be $3,597 in 2008, up 10.1% from $3,266 in 2007, according to the survey results.

Nashville saw the greatest cost increase in 2007 (14.1%), followed by San Diego (11.5%) and San Francisco (11.5%).

On average, Hewitt saw cost increases in 2007 of 9.1% for traditional indemnity plans, 8.7% for health maintenance organizations (HMOs), 3.9% for point-of-service (POS) plans and 2.4% for preferred provider organizations (PPOs).

However, in 2008, Hewitt forecasts that companies will receive cost increases of 9% for traditional indemnity plans, 8.5% for POS plans, 9% for HMOs, and 8.5% for PPOs,

This means that the average cost per person for major companies in 2008 will increase from $7,957 to $8,673 for HMOs; $7,790 to $8,452 for PPOs; $8,573 to $9,302 for POS plans; and $9,277 to $10,112 for indemnity plans.

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