Employer-sponsored health care has evolved a lot over the past 20 or so years. Towers Perrin, in its annual Health Care Cost Survey, reviewed key trends in health care costs, enrollment, plan design, population health, prescription drugs, retiree medical benefits, and other areas from 20 years ago as a way to better understand future trends. To no one’s surprise, the health care landscape has changed significantly. Here’s a summary of the findings:

Average annual cost increase: 15% Average annual cost increase: 6% U.S. medical costs will continue to outpace inflation
Americans spent $558 billion on health care Americans are projected to spend $2.6 trillion on health care in 2009 Americans are projected to spend $4.3 trillion on health care in 2017
Nation’s health bill was paid by:
  • Government — 41%
  • Private insurers — 38%
  • Individuals — 21%
2009 projections:
  • Government — 46%
  • Private insurers — 42%
  • Individuals — 12%
2017 projections:
  • Government — 49%
  • Private insurers — 41%
  • Individuals — 11%
65% of private sector employees had employer-based retiree medical coverage 47% of large employers subsidize retiree medical costs Within the next 10 years, it is anticipated that 90% of private sector retirees will pay the majority of the cost of their health care coverage
Plan type market share:
  • Indemnity — 62%
  • PPO — 13%
  • HMO — 20%
  • POS — 5%
  • ABHP—N/A
Plan type market share:
  • Indemnity — 2%
  • HMO — 26%
  • POS — 15%
  • ABHP — 10%
In five years, we anticipate ABHPs will be offered by 80% of employers and will be the primary medical option for 50% of that group
$40.3 billion spent on prescription drugs More than $188.5 billion spent on prescription drugs U.S. prescription drug spending is projected to increase to $446.2 billion in 2015, a 138% increase in 11 years
Average price of a prescription: $22.00 Average price of a prescription: $75.00 Employers will continue to band together to form prescription drug purchasing pools to increase their purchasing power through higher volume and shared expertise   

Source: Towers Perrin, “2009 Health Care Cost Survey”

ABHP = Account-Based Health Plans

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