Due to recent higher medical claim costs, an aging population
and changes brought about by health care reform, employers can
expect 2011 health care cost increases to be at their highest
levels in five years, according to an analysis by Hewitt
Associates, a global human resources consulting and outsourcing
company. Next year, Hewitt projects an 8.8 percent average premium
increase for employers, compared to 6.9 percent in 2010 and 6.0
percent in 2009.
According to Hewitt’s analysis, the average total health care
premium per employee for large companies will be $9,821 in 2011, up
from $9,028 in 2010. The amount employees will be asked to
contribute toward this cost is $2,209, or 22.5 percent of the total
health care premium. This is up 12.4 percent from 2010, when
employees contributed $1,966, or 21.8 percent of the total health
care premium. Average employee out-of-pocket costs, such as
copayments, coinsurance and deductibles, are expected to be $2,177
in 2011—a 12.5 percent increase from 2010 ($1,934).
These projections mean that in a decade, total health care
premiums will have more than doubled, from $4,083 in 2001 to $9,821
in 2011. Employees’ share of medical costs—including employee
contributions and out-of-pocket costs—will have more than tripled,
from $1,229 in 2001 to $4,386 in 2011.
According to Hewitt, a variety of factors are driving the
increase in projected health care cost increases for 2011.
Employers are seeing an increase in the amount of charges and
frequency of catastrophic claims. This is particularly true today,
as slower levels of hiring have left employers with slightly older
workforces who are more prone to costly medical conditions. Hewitt
estimates that the most immediate applications of health care
reform—including covering dependents to age 26 and the elimination
of certain lifetime and annual limits—contributed approximately 1
percent to 2 percent of the 8.8 percent projected increase for
2011.
“After 18 months of waiting for health care reform to play out,
employers find themselves in a very challenging cost position for
2011,” said Ken Sperling, Hewitt’s health care practice leader.
“Reform creates opportunities for meaningful change in how health
care is delivered in the U.S., but most of these positive effects
won't be felt for a few years. In the meantime, employers continue
to struggle to balance the significant health care needs of an
aging workforce with the economic realities of a difficult business
environment. While health care reform cannot be blamed entirely for
employers’ increasing cost, the incremental expense of complying
with the new law adds fuel to the fire, at least for the short
term.
“Companies cannot afford to take a ‘wait and see’ approach to
health care benefits. Now is the time for organizations to be
bolder about the strategies, programs and tactics they’re using to
contain cost and motivate employees to engage in their own health,”
added Sperling.
2010 Cost Increases by Major Metropolitan Area
In 2010, a few U.S. markets experienced rate increases
significantly higher than the national average. Five major
metropolitan areas in California, for example, experienced rate
increases of 10 percent or higher: Los Angeles (10.2 percent),
Orange County (10.6 percent), Sacramento (10.7 percent), San Diego
(10.8 percent) and San Francisco (10.4 percent). Other U.S. cities
experiencing higher-than-average rate increases included Charlotte
(9.7 percent); Newark, NJ (10.8 percent); Philadelphia (10
percent); and Tampa (9.2 percent). Conversely, Columbus, Ohio (4.3
percent); Dallas/Ft. Worth (3.7 percent); Portland, OR (4.6
percent); and Washington D.C. (4.0 percent) experienced
lower-than-average rate increases in 2010.
“Similar to 2009, workers in California saw higher health care
increases this year mainly because more companies in the state
offer fully insured HMOs, and increases for these plans have been
higher than average,” said Bob Tate, Hewitt’s chief health actuary
and the leader of the annual cost study.
2010 Cost Increases by Plan Type
In 2010, Hewitt saw average cost increases of 7.8 percent for
health maintenance organizations (HMOs), 6.9 percent for
point-of-service (POS) plans and 6.3 percent for preferred provider
organizations (PPOs).
For 2011, Hewitt forecasts that companies will have average cost
increases of 8.5 percent for PPOs and POS plans. Companies will see
an average cost increase of 9.4 percent for HMOs. That means from
2010 to 2011, the average cost per person for major companies will
increase from $8,671 to $9,408 for PPOs; $9,373 to $10,254 for
HMOs; and $9,747 to $10,575 for POS plans.
Employer Response to Rate Increases
According to a recent Hewitt survey of 600 large U.S. companies,
employers have grown increasingly concerned about rapidly rising
health care costs. Almost all (95 percent) of companies say
managing costs is a top business issue. To mitigate these costs,
employers continue to take a number of proactive steps. These
include:
Increasing Employee Cost Sharing: With the cost of
providing health care benefits continuing to rise, employers
continue to pass some of these costs to employees. In a recent
Hewitt survey, "increasing employee cost sharing" was ranked by
employers as one of their top five health care tactic priorities
over the next three to five years. Workers may see employers
passing along these costs in different ways, including:
- Shifting plan designs from fixed
dollar copayments to coinsurance models, where employees pay a
percentage of the out-of-pocket costs for each health care
service.
- Increasing deductibles out of
pocket limits and cost sharing for use of non-network
providers.
Managing Dependent Eligibility and Subsidies: An
increasing number of employers are realizing they can significantly
reduce health care costs by assessing the eligibility of covered
dependents in their plans. About three-quarters of Hewitt’s health
and welfare administration clients have conducted dependent audits
in the past five years to assess the eligibility of covered
dependents. According to Hewitt's data, on average, 11 percent of
people enrolled in an employer's health plan are ineligible. For a
company with 10,000 enrollees, this can equate to millions of
dollars in health care costs each year.
While still an emerging trend, a growing number of companies are
charging premiums on a per-participant basis, rather than through a
“lump sum” premium traditionally found within the “individual” and
“family” pricing models. Companies may also be shifting more costs
to employees by either requiring them to pay more for spousal
coverage, or by applying surcharges to encourage dependent spouses
to enroll in their own employer’s plans. According to Hewitt's
SpecSummary database of more than 1,200 companies, 13 percent
currently impose a spousal surcharge.
Aggressive Vendor Management and Consolidation:
Continuing a trend Hewitt has seen over the past three years,
employers are aggressively managing vendor relationships. Programs
and vendors that do not deliver measurable, near-term results are
being replaced or eliminated. Employers continue to look for "best
in class" vendors for certain services, while consolidating vendor
relationships to secure volume discounts.
Improving Employee Health: According to recent
Hewitt research, disease management and health improvement programs
continue to remain a top priority for employers. More than half (53
percent) of companies currently have a disease management/health
improvement strategy in place. Of those that don’t, 11 percent
planned to implement one in 2010 and another 75 percent planned to
implement one in the next three to five years.
Also growing in popularity is employers’ willingness to use
penalties and financial incentives as a way to increase employee
participation in these programs. Hewitt’s recent survey of 600
large U.S. employers found that nearly one-half (47 percent) say
they either already use or plan to use financial penalties over the
next three to five years for employees who don’t participate in
certain health improvement programs. Of those companies, most say
they will do so through additional employee cost shifting, such as
higher benefit premiums (81 percent), an increase in deductibles
(17 percent) and an increase in out-of-pocket expenses (17
percent).
“While employers have taken steps to mitigate costs in 2011,
many organizations across all industries are already focused on
developing multi-year strategies and a 2012 action plan aimed at
resetting their health care programs to reflect today's cost
realities and tomorrow's changing health insurance landscape," said
Jim Winkler, managing principal and senior health care strategist
at Hewitt. "In the wake of reform, rising costs and an increasingly
unhealthy workforce, employers know they must reassess the role
they play in engaging their workforce to be healthy, present and
productive at work."
About Hewitt’s Data
Hewitt’s data is derived from the Hewitt Health Value
Initiative™ database, which contains detailed census, cost and plan
design information for 350 large U.S. employers representing 14.4
million participants and $51.9 billion in 2010 health care
spending.
About Hewitt Associates
Hewitt Associates (NYSE: HEW) provides leading organizations
around the world with expert human resources consulting and
outsourcing solutions to help them anticipate and solve their most
complex benefits, talent, and related financial challenges. Hewitt
consults with companies to design and implement and communicate a
wide range of human resources, retirement, investment management,
health management, compensation, and talent management strategies.
As a leading outsourcing provider, Hewitt administers health care,
retirement, payroll, and other HR programs to millions of
employees, their families, and retirees. With a history of
exceptional client service since 1940, Hewitt has offices in more
than 30 countries and employs approximately 23,000 associates who
are helping make the world a better place to work. For more
information, please visit www.hewitt.com.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/cgi-bin/mmg.cgi?eid=6443195&lang=en
Hewitt Assoc A (NYSE:HEW)
Graphique Historique de l'Action
De Déc 2024 à Jan 2025
Hewitt Assoc A (NYSE:HEW)
Graphique Historique de l'Action
De Jan 2024 à Jan 2025
