Hewitt Report Predicts 13% to 16% Increase in Health Costs
U.S. employers will face a 13% to 16% increase in health care costs in 2002, following a 10.2% increase this year, according to a new Hewitt Associates report released yesterday. Although some companies will absorb the higher costs, the report predicted that many will pass at least 25% to 30% of the increase to employees. The report estimated that employees will likely pay between $186 and $463 more for health insurance in 2002 (Hewitt Associates release, 10/29). Lisa McGiffert, senior policy analyst at Consumers Union, the not-for-profit company that publishes Consumer Reports, said that employees will "definitely be hurt" by the projected increase in health care costs. "Many are already having trouble getting care and paying premiums," she said, adding, "They'll get less coverage and pay more out of pocket. It'll raise the number of uninsured" (Conklin, Dallas Morning News, 10/30). Jack Bruner, national health care practice leader at Hewitt, said that employers will face double-digit increases in health care costs for the next few years "unless there is a fundamental change in the way health care is delivered." To address the problem, some employers have reconsidered cost-sharing and contribution strategies, increased copayments for doctor visits and imposed "heftier out-of-network penalties" on employees. Some have eliminated "cost-inefficient" health plans and shifted from point-of-service plans to less-expensive preferred provider organization plans. In addition, some employers with large numbers of employees affected by asthma, diabetes or heart problems have contracted with health plans that offer "specialized" treatment and prevention programs. Some also have moved toward higher copayments and coinsurance on prescription drug coverage or have adopted "customized drug options and other new concepts" to manage costs (Hewitt Associates release, 10/29). According to a new Segal Co. report, prescription drug costs will likely increase 15% to 20% in 2002 after a 15% increase this year (Perrault, Denver Rocky Mountain News, 10/30).