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Health benefit costs continue to outpace CPI

MANAGED CARE November 2006. © MediMedia USA
Managed Care Outlook

Health benefit costs continue to outpace CPI

MANAGED CARE November 2006. ©MediMedia USA













Although the rate of increase has been dropping for four years, health care costs for employers are still projected to rise 6 percent in 2007. That increase, which is two thirds higher than the Consumer Price Index (the change in the price paid by consumers for a representative basket of goods and services), will affect businesses trying to maintain adequate coverage for their employees — and make medical coverage increasingly burdensome.

Based on these projections, the annual cost per employee will approach $9,000 next year, according to the Towers Perrin 2007 Health Care Cost Survey. Average premium increases will amount to $518 per employee; employers will pay an increase of $374 per employee, and employees on average will pay $144 more in 2007.

"While it is good news that 2007 will be the fourth year of decline in overall average rate of increase, it is definitely not a signal that pressures are abating or that companies can sit back and expect rates to continue this downward trend," says Dave Guilmette, managing director of the Towers Perrin health and welfare practice.

While many companies are taking steps to help their employees manage the growing costs, the fact remains that year after year, employee contribution increases are taking their toll on employees as well as employers. As a result, employers are becoming increasingly concerned about growing numbers of active employees who are opting out of coverage entirely.

Working people are getting priced out of the health care system, says Guilmette.

Source: Towers Perrin 2007 Health Care Cost Survey

CHARTS BY JULIE RIDGE