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Survey: Employers' health care costs to increase six percent in 2009 (2/24)

February 24, 2009
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U.S. employers expect health care cost increases to hold steady at six percent and more plan to adopt consumer-directed health plans (CDHPs) in 2010 in an effort to control cost increases, according to a forthcoming survey by Watson Wyatt, a leading global consulting firm, and the National Business Group on Health, an association of more than 300 mostly large employers, including 64 of the Fortune 100.

The survey of 489 large U.S. employers found that the median rate of health cost increases is expected to remain at six percent in 2009, although this is still nearly twice the rate of inflation. The increase is the same rate that employers experienced in both 2007 and 2008. In 2006, health care costs increased by eight percent.

"Cost increases have stabilized, but the financial crisis is causing many companies to reevaluate their health plan strategies," said Ted Nussbaum, group and health care practice leader at Watson Wyatt, in a statement released by the National Business Group on Health. "While large-scale changes appear unlikely, economic realities are leading companies to adopt strategies that emphasize greater personal health accountability to their workers."

Just more than half (51 percent) of companies now offer workers a CDHP, up from 47 percent in 2008. Another eight percent are expected to adopt a CDHP by 2010. CDHPs are helping employers control costs - companies with at least half of their workers enrolled in a CDHP have a two-year cost trend (4.6 percent) that is 25 percent lower than non-CDHP sponsors (6.1 percent).

Still, challenges remain for employers trying to provide more affordable coverage to their workers, according to the survey. Two-thirds of employers (67 percent) cite the poor health habits of their employees as a considerable challenge to managing their health care costs. Other challenges include underuse of preventive care services (42 percent), the high cost of catastrophic and end-of-life care (36 percent), and poor employee understanding of how to use the plan (30 percent).

For employers, the average health care expenditure per employee in 2008 was $7,173 and is expected to increase to nearly $7,400 in 2009. Employees paid an average of 20 percent of their total medical premium costs in 2008, a number that will likely stay the same in 2009.

"Given the current economic climate, high costs are clearly top of mind for workers and their employers," said Helen Darling, president of the National Business Group on Health. "By promoting healthy habits for workers, companies can mitigate cost pressures and build a healthier, more productive workforce. Strong support from senior management and effective communication around these initiatives will help employees grow more comfortable taking greater responsibility for their health."

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