Survey: Health Plan Cost Hikes Slowing

Adding to evidence that group health plan cost increases are easing, new research shows that such costs rose an average 5.3 percent this year to $7,982 per employee, according to Hewitt Associates.

That 5.3 percent increase is down sharply from 2006, when Hewitt reported that plan costs rose an average of 7.9 percent. In 2005, plan costs rose 9.2 percent.

Hewitt projects an average increase of 8.7 percent in 2008. Group health plans’ actual increase may be lower, as Hewitt’s projection is based on a survey of budgets that employers have set and the premium increases they have received so far.

Increases could be lower if, for example, employers drop their most expensive health care plans or, in the case of self-funded employers, greater cost-shifting to employees reduces utilization.

In a similar analysis last year, Hewitt projected a 7.7 percent average increase this year. This year’s actual increase is 5.3 percent.

A survey released last week by the Kaiser Family Foundation reported a similar average increase—6.1 percent—in 2007 health plan costs.

The Hewitt analysis is based on the experience of health plans sponsored by about 400 major employers.

The analysis is available at www.hewitt.com.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.