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The average cost of U.S. employer-sponsored health coverage rose 7.5% this year, to $6,679 per employee, say researchers at Mercer Human Resource Consulting L.L.C., New York.

The rate of increase is the lowest Mercer has recorded since 1999. A year ago, a Mercer survey found that 2003 coverage costs were up 10.1%.

Mercer, a unit of Marsh & McLennan Companies Inc., New York, bases its health cost statistics, which include the cost of dental benefits as well as medical coverage, on a survey of about 3,000 U.S. public and private employers with at least 10 employees.

Employers are easing efforts to increase workers deductibles, co-payments and coinsurance rates, but past efforts to share costs with workers may be starting to bear fruit, according to Mercer researchers.

When the annual deductible is $1,000, “you think twice about going to the doctor if you have a cold,” says Blaine Bos, a Mercer consultant in Minneapolis who helped write the study report.

The Mercer survey found growing interest in “consumer-driven” programs that combine high-deductible health coverage with personal health accounts: 1% of the employers surveyed already offer the account-based programs, and 16% say they are likely to offer the programs by 2006. Employers are paying $5,233 per employee for the account-based programs, compared with an average cost of $5,627 for health maintenance organization coverage and $6,095 for preferred provider organization coverage.

The Mercer health coverage cost survey is different from other widely publicized health cost surveys because it looks at the actual cost of coverage during the current year rather than cost projections for the following year.

Hewitt Associates L.L.C., Lincolnshire, Ill., which surveys large employers, said in October 2003 that participating employers were predicting a 13% increase in rates for 2004. Now, participating employers say their health coverage costs might go up about 11% in 2005, Hewitt says.

Towers Perrin L.P., New York, bases its projections on survey responses from about 200 large employers. In 2003, the Towers Perrin survey participants were expecting an 11% increase in 2004 health coverage rates. Now, they are expecting to see an 8% increase in 2005.


Reproduced from National Underwriter Edition, November 24, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.