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DOUBLE DIGIT HEALTH CARE COST INCREASES FORECAST

The cost of providing health care is expected to increase as much as 11.2 percent in the next 12 months, according to a recent survey of more than 70 health insurers representing more than 100 million insured individuals.

A breakout by plan category found:

• Health maintenance organizations (HMOs)—rates are projected to rise by 10.9 percent. That’s down from 12.2 percent in spring 2006.

• Point-of-service (POS) plans—rates are projected to rise by 10.8 percent, down from 11.9 percent.

• Planned provider organizations—rates are projected to rise by 11.2 percent, down from 12.4 percent.

Although it is encouraging to see a continuing decline in health care trend rates, employers are still challenged by the fact that health care cost increases are more than four times general inflation rates.

For many businesses, health care costs continue to be their fastest growing expense.

Increasing patient demand for services, an aging population, increasing medical technology and hospital costs, increasing price and utilization of prescription drugs, poor lifestyle choices, cost shifting, and medical malpractice costs are blamed for the double-digit rate increases.

Employers have a number of strategies to reduce the rate of these increases.

Some of the more successful strategies consist of implementing consumer-driven health care plans, chronic condition management programs and health promotion programs.

Coupled with plan design changes and/or employee contribution changes, these strategies can reduce an employer’s health care cost increase by more than half.

Among other findings:

• Rates for group medical plans rose as much as 15 percent since fall 2006 for some small and medium-sized employers.

• Rates for employers with 501 or more workers rose as much as 6 percent to 10 percent

Instead of limiting options or discounting coverage, though, most employers are continuing traditional coverage plans, with employees shouldering the cost of higher deductibles and co-pays, the council found.

The majority of clients are beginning to increase the deductibles to reduce the overall increases.

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