A new survey provides more evidence that employers have healthcare cost increases under control.
Group healthcare premiums-or in the case of self-funded plans, claims paid-rose an average of 2.1% between the spring of 1994 and the spring of 1995, according to a survey released last week by consultant KPMG Peat Marwick.
The 1,037 employers surveyed-all with at least 200 employees-were not asked to provide actual dollar amounts spent on healthcare for the prior year.
The 2.1% increase, according to KPMG, marks the first time in more than a decade that the increase in healthcare costs trailed behind the rise in the overall Consumer Price Index.
The new survey is the second major study to detail the turnaround in healthcare costs, which only a few years ago were rising annually by double-digits and seemed beyond the ability of employers and insurers to control.
Earlier this year, a survey by A. Foster Higgins & Co. reported that employers' group healthcare plan costs actually fell by 1.1% during 1994.
And the outlook is good for a continued buyers' market in healthcare.
For example, many HMOs are expected to keep next year's rates at their 1995 levels or raise them by just 1% or 2%, benefit consultants say.
Healthcare costs are flattening out or even decreasing as cost-efficient managed-care plans boost their market share, while employers "continue to become smarter in the way they provide health benefits to workers," KPMG said.
HMOs, whose 0.4% cost increase between 1994 and 1995 was less than any other type of health plan during the period, have been steadily gaining market share. In 1992, for example, HMOs accounted for 22% of healthcare plan enrollments, while HMOs now have 29% of plan enrollments.
By contrast, enrollment in indemnity healthcare plans, the costs of which increased 2.7% over the last year, has fallen to 31%, down from 45% in 1992.
"It remains clear that the conventional fee-for-service plan is quickly becoming a way of the past," according to the survey.
Cost increases and premium charges by type of plan include:
HMOs, for which premiums rose 0.4%. Monthly premiums averaged $160 for single coverage and $423 for families.
PPOs, for which premiums rose an average of 3.5%. Monthly premiums averaged $166 for single coverage and $433 for families.
In another healthcare-related issue, the survey found that 30% of employers believe that their HMO "saves a lot" of money.