Employers can expect another year of rising premiums

One survey projects HMO rates will increase slightly more than those for PPO or POS plans.

By Julie A. Jacob, amednews staff. Nov. 4, 2002.

Employers will get hit with an average 15.4% jump in health care premium costs next year, forcing them to try an ever-broader range of strategies to keep costs under control.

The projected increases, which come on the heels of this year's 13.7% increase, would be the highest in 10 years, said Ken Sperling, a health care market leader for Hewitt Associates, which conducted the annual survey.

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Lincolnshire, Ill.-based Hewitt projects that costs for preferred-provider, point-of-service and indemnity plans will increase an average of 15%,while costs for HMOs will rise an average of 16%. Results are based on data from employers representing 750,000 employees nationwide, said Sperling.

Health care costs are soaring due to the aging of the baby boomers, expensive new technology, rising prescription drug costs and something new: rising hospital costs.

"We haven't seen hospital cost increases creep into the driver of trends for several years," said Sperling.

He noted that rising hospital costs are due to both increased usage and higher prices for hospital services.

Health care premiums are expected to jump 15% in 2003.

Employers are eyeing a variety of methods to curb soaring health care costs, according to Hewitt, such as boosting employee co-payments and deductibles, tightening prescription drug benefits and dropping health plans that are not cost-efficient.

In addition, employers are also starting to offer consumer-driven health plans, in which patient spending accounts are combined with high-deductible health plans or employees are given the opportunity to customize their coverage.

Sperling estimated 100 to 200 employers will offer consumer-driven plans next year.

While there aren't any hard data available yet on whether consumer-driven plans will curb increases in health care costs for employers, "there certainly are data to indicate that the more someone has to spend on a service, the less of the service they use," Sperling said.

"We just don't have a very good sense as to how that behavior changes. But it is inevitable that employees will be paying more" for health care benefits.