Increasing Healthcare Costs Cutting Into Profits

July 18, 2005 ( - A new study by PricewaterhouseCoopers shows that half of US companies say increasing healthcare costs have cut into profits and more than 75% may shift some of the costs back to employees.

About one fourth of the companies surveyed said cost increases may result in smaller raises for employees and about 20% may slow hiring of new permanent employees, according to a news release. Respondents of the survey said costs per employee had risen an average of 12% in the past year and they expect a similar increase in the coming year.

Thirty-five percent of the companies surveyed are currently offering a High-Deductible Health Plan (HDHP) and 25% are offering Health Savings Accounts (HSAs), according to the release. Very few reported the intention of adding such programs to their health benefit offerings. The release notes that around 60% of companies believe that requiring employees to pay higher deductibles would cause them to defer needed care and risk long-term problems.

One in five employers thought that making employees share more of the healthcare costs would have little impact on their total costs. According to the release, more than 80% of executives in the survey said the number one option for employers to reduce healthcare costs was to provide financial incentives for employees to live healthier lifestyles.

Three-quarters of companies surveyed believe that employers can help reduce costs by providing employees with better information about healthcare prices, quality, and generic drugs. Almost 70% believe providing this information will lead to both higher quality medical care for employees and lower costs.

In response to its Management Barometer Survey, PricewaterhouseCoopers Health Research Institute launched a major initiative to research the move towards consumerism by employers across multiple industries, according to the release. The research looks at changes employers make in benefit plan design that incorporate greater healthcare consumerism, such as HSAs, and efforts to improve information to employees on costs, quality and treatment options.

PricewaterhouseCoopers Health Research Institute provides information on trends affecting all health-related industries. More information can be found at .