September 28, 2010

Employers To See Rising Health Care Costs In 2011

A major consulting firm released its forecast Monday saying it expects employers to pay nearly 9 percent more for health care costs for their employees in 2011, the highest level in five years.

Hewitt Associates also predicted in their report that employers will most likely ask their workers to cover 12 percent more of these costs out of their own pockets.

The Hewitt report blames the increase on higher medical claim costs and an aging population, but also on US healthcare reform, which has become one of the most politically charged agendas in the upcoming November elections as disappointed voters learn they have to wait for promised savings to take effect.

The report forecasts average health care to rise to $9,821 per employee in 2011, up from $9,028 in 2010. Employees will most likely pay 22.5 percent of the total premium, up from 12.4 percent in 2010.

Ken Sperling, Hewitt's health care practice leader, said in a statement: "After 18 months of waiting for healthcare reform to play out, employers find themselves in a very challenging cost position for 2011."

Positive effects from healthcare reform, including savings, would take a few years to show up, said Sperling.

Contributing factors for the increase in healthcare costs include changes in allowing adult children to remain on their parents' plans until the age of 26 and barring insurance companies from denying coverage to children with pre-existing health conditions, according to the Hewitt report. However, the contribution is small -- eight to 16 dollars, or 1 to 2 percent of the total increase.

"In the meantime, employers continue to struggle to balance the significant health care needs of an aging workforce with the economic realities of a difficult business environment," Sperling said.

2011 increases in healthcare costs will be a nearly 2 percent added increase over a 2010 rise of 6.9 percent. Healthcare premiums will have doubled since 2001, from $4,083 to $9,821 in 2011, said the Hewitt report.

For the forecast report, Hewitt used a database of census, cost and plan design information for 350 large U.S. employers covering nearly 52 billion dollars in health insurance costs for more than 14 million employees.


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