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Life Health > Health Insurance

Hewitt Sees Continued Health Care Cost Surge

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NU Online News Service, Oct. 17, 4:10 p.m. – U.S. companies are expected to be hit again with double-digit health care cost hikes in 2003, which would be the highest increase since the early 1990s, according to projections from Hewitt Associates, an employee benefits consulting firm in Lincolnshire, Ill..

Hewitt forecasts a 15.4% average increase for 2003, up from this year’s hike of 13.7%.

Some companies will continue to absorb most of next year’s increase, but many are increasing employees’ share of health care premiums, the company finds. The average employee contribution for 2003 will be 19% for their own coverage and 24% for dependent coverage, Hewitt’s data shows.

“Unless there is a fundamental change in the way health care is delivered, costs will double in the next five years,” said Jack Bruner, national health care practice leader for Hewitt. “This is a major concern for senior management as it impacts the bottom line of companies across the country.”

On average, Hewitt forecasts that companies will receive 2003 cost increases of 15% for preferred provider organizations, point-of-service plans and traditional indemnity plans and 16% for health maintenance organization plans.

That means from 2002 to 2003, the average cost per person for most major companies will increase from $5,157 to $5,982 for HMOs; $5,545 to $6,367 for PPOs; $5,639 to $6,485 for POS plans; and $6,304 to $7,249 for indemnity plans.

Hewitt bases its projections on data from more than 2,000 health plans in 139 U.S. markets, including 300 major employers and more than 16 million health plan participants.

“To combat rising costs, many organizations are actively evaluating new alternatives, including higher cost sharing, spousal surcharges and adding consumer-driven health plans,” says Bruner.

Looking at major metropolitan areas, Hewitt’s 2002 data reveals that the highest rate increases this year were recorded in Atlanta (14.8%), Denver (13.7%), Dallas/Fort Worth (13.6%), Boston (13.5%), Detroit (13.4%), Cincinnati (13%), Tampa Bay (12.9%) and San Francisco (12.8%).


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