Hewitt Associates Data Reveals Rate of Increases for U.S. Health Care Costs Declines for Fifth Consecutive Year

Copyright: Business Wire
Source: Business Wire

LINCOLNSHIRE, Ill.--(BUSINESS WIRE)--Sept. 24, 2007--U.S. companies enjoyed a nine-year low in health care cost rate increases this year, but employers and employees should not expect to see that trend continue in 2008, according to Hewitt Associates, a global human resources services company. In 2007, average health care rate increases were 5.3 percent, down from 7.9 percent in 2006. However, Hewitt is projecting an 8.7 percent average increase for employers in 2008.

Outlook for 2008

According to Hewitt, the average health cost per person for major companies will increase from $7,982 in 2007 to $8,676 in 2008. The amount employees are being asked to contribute in 2008 will be $1,859, representing approximately 21 percent of the overall health care premium and up from $1,690 in 2007. Average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, are also expected to increase from $1,576 in 2007 to $1,738 in 2008. Overall, employees' total health care costs -- including employee contribution and out-of-pocket costs -- are projected to be $3,597 in 2008, up 10.1 percent from $3,266 in 2007.

"It's encouraging to see rate increases soften because it means that companies are making a concerted effort to manage health care costs," said Jim Winkler, practice leader of Hewitt's Health Management Consulting business. "However, one of the primary ways employers have been accomplishing this is by passing a significant percentage of costs to employees, and we're seeing evidence that this strategy is prompting an increasing number of employees to forego necessary preventative care and/or not comply with prescribed medications. While some cost shifting is appropriate, it's critical that companies design their health care programs in a way that encourages employees to use them -- and use them wisely. Otherwise, they are essentially trading preventative care now for 'rescue care' later, which will lead to unhealthy employee populations, a decrease in employee productivity and ultimately -- higher health care costs."