Consulting Firms Chart Health Rate Increases

By Trevor Thomas

September 30, 2007 at 04:00 PM

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Consultants at Hewitt Associates Inc. are expecting health rates to increase about 8.7% in 2008, while their colleagues at Towers Perrin Inc. are predicting costs will rise about 7%.

Hewitt, Lincolnshire, Ill., says the average cost of coverage will increase to $8,676 per employee, from $7,982, with employees' share of the costs increasing to $1,859, from $1,690.

The projected 2008 increase is up from an average increase of 5.3% this year.

Hewitt is basing its projections on an analysis of data for 1,800 health plans, including plans at 400 large employers.

Towers Perrin, Stamford, Conn., which is basing its projections on a survey of 315 national employers, says costs will increase to $9,312 per employee, from $8,735, with employees' share of the costs increasing to $2,040, from $1,884.

Earlier this year, Towers Perrin estimated in a separate survey report that employers' 2007 health care costs are about 7% higher than in 2006.

Towers Perrin consultants say they see a sharp divide between employers that are making aggressive efforts to analyze and control health care costs and other employers.

About a quarter of large employers are continuing to report cost increases over 10%, while 45% of employers are reporting increases of 5% or less, which is close to the 4% inflation rate for U.S. medical services, Towers Perrin says.

Typical co-payments for active employees will be $20 for regular doctor office visits and $30 for in-network specialist visits, according to Towers Perrin.

Additional information was contributed to this report by Allison Bell.

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