Aon Forecasts 2004 Health Care Increase Of At Least 16%

"The forecasted figures apply if you dont do anything to cut costs," he says. "But most employers actually do something. So actual increases may be 2% to 4% less than the forecast."

Next years predicted increases would be about eight times the annual general inflation rate of 2.1%, as recently reported by the Bureau of Labor Statistics in Washington, Sharon points out.

A notable aspect of Aons most recent surveys is that health plan rates for different types of plans are beginning to converge, Aon notes in its report. In the past, HMO and POS rate increases were several percentage points lower than those for PPO and indemnity plans.

Sharon says Aon expects employers to respond to health care cost pressures by increasing copayments and premiums for employees.

Employers will also likely continue to explore new options, Sharon points out, such as consumer-driven health plans, disease management programs, pharmacy coalitions, health promotion incentives and tiered hospital networks (where reimbursement levels for a given hospital are based on the carriers ratings of that hospitals cost-effectiveness).

Consumer-driven plans, such as defined-contribution health care plans, are designed to get consumers more involved in controlling costs, notes Sharon.

The trend is toward plan designs that require more cost sharing by the consumer, he explains, thereby forcing employees to seek less expensive options, such as generic drugs over brand names.

"Part of the consumer-driven movement is that plan designs typically insulate consumers too much from the cost of their health care decisions," Sharon says.

For dental plans in 2004, Aon found increases of 4.8% for HMOs, 7.6% for PPOs and 7.6% for indemnity plans.

Increases for stand-alone pharmacy plans averaged 17.7%, while for vision care, increases averaged 3.8%.

Reproduced from National Underwriter Edition, July 14, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.