Employers expect their healthcare premiums to rise nearly 13% this year-the largest jump in a decade-and to continue their double-digit climb in coming years, according to a recent survey of more than 2,800 employers nationwide.
The average cost to companies for each employee's healthcare benefits rose 11.2% to $4,924 in 2001, according to the report released late last year by benefits consulting firm William M. Mercer. That increase was five times the overall rate of inflation, and marked the fourth year of premium increases.
Among the employers surveyed, 15% said they expected premium increases of 20% or more this year. Companies with 10 or more employees faced increases of 11.2% in 2001 and 8.1% in 2000, the study said.
And the double-digit cost increases are likely to continue beyond 2002, the report suggests, as managed-care companies abandon the preauthorization requirements that earned them a reputation as "heartless deniers of care."
"We're going to be looking at a period of about four years of double-digit inflation," said Blaine Bos, a Mercer principal and chief author of the survey.
The increases come as the weakened economy is putting a squeeze on companies' profits. Moreover, aging baby boomers will require more medical care and prescription drugs over the next decade, even as consumers increasingly fight tight HMO rules, Bos said.
As a result, many employers want to adopt cost-sharing measures, the survey found. Some 40% of companies with 500 or more employees-a group whose costs rose 12.1% this year, to $5,162 per employee-said they would require workers to pay more of their health expenses this year by raising deductibles and copayments.