November 2007

Survey confirms increasing healthcare costs

If you provide healthcare benefits to your staff, you already know that costs are up. According to the “”National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer, a consulting, outsourcing and investment-services firm, total health benefit costs rose by 6.1 percent in 2007.

The increase was at the same pace as last year, and averaged $7,983 per employee. The survey included private and public employers with 10 or more employees and nearly 3,000 employers participated.

Cost increases have held steady for three years (after spiking to nearly 15 percent in 2002) and are likely to slow a bit further in 2008, to 5.7 percent, according to Mercer.

The survey showed that among employers with fewer than 200 employees, health-coverage prevalence fell from 63 percent to 61 percent in 2007.

The survey also found that 80 percent of large employers use health-management programs as a way to control costs and improve productivity, while 52 percent are actively promoting employee consumerism. The majority of employers using these strategies say they have been successful (63 percent for health management and 62 percent for consumerism). Large employers, which tend to be more proactive in managing benefit costs, experienced a somewhat lower average cost increase than small employers in 2007 (5.1 percent compared to 6.6 percent).

Source: Mercer, www.mercer.com.

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