Employers can expect to see their health insurance costs rise an average of 11.3% in 2005, marking the fifth straight year of double-digit premium growth, according to a new survey by Hewitt Associates, Lincolnshire, Ill. The increase follows an average rate hike of 12.3% last year. By plan type, employers can expect to see premium increases averaging 11.5% for HMOs, 11% for PPOs, 10.5% for traditional indemnity plans and 11.5% for point-of-service plans, the survey of 2,000 health plans and 300 major employers found. And as in years past, employees will pay a greater share of the total overall cost, or about 19% in 2005; individual employees on average will pay $1,481 next year, up 15% from $1,288 in 2004 and more than double what they paid five years ago, the survey found.
While all major markets experienced rate hikes last year, 11 cities saw increases of 15% or more, with Memphis, Tenn., topping the list at 22.6%. "While there are many different variables that factor into regional healthcare cost increases, one of the most powerful drivers is the level of consolidation in the market," Jack Bruner, Hewitt's national healthcare practice leader, said in a news release. "Plans and providers continue to merge in many cities, reducing the purchasing power and number of options available to employers." -- by Laura B. Benko