Employee Benefits Consulting Group Home Page

Employees pay growing share of health benefit costs

Health insurance premiums surged an average of 12.7% last year, the largest increase since 1990, leading more employers to scale back benefit coverage and increase employees' share of the costs, according to an annual employer survey released Thursday by the Kaiser Family Foundation.

Premiums for individual coverage in group health plans cost an average of $3,060 this year, while family coverage averages $7,954, according to the survey of 750 employers. Employee costs for single coverage average $454 per year. The employee share of premiums for family coverage averages $2,084. Deductibles for in-network providers in PPO plans rose 37% to $276, up from $201 in 2001.

"One of the most alarming findings is the continued growth of underlying health care expenses, which indicates that we can expect double-digit inflation for the foreseeable future," observes Jon Gabel, vice president at the Health Research and Educational Trust (HRET), which co-sponsored the survey.

The use of three-tiered cost sharing in prescription drug benefit plans has nearly doubled since 2000, increasing to 57% of the responding employers. The costs of drugs within the tiers is also higher, with brand name drugs with generic substitutes costing an average of $26, compared to $20 per prescription in 2001. For more survey responses, visit the Kaiser Family Foundation Web site.

Health care benefit costs on course to double by 2007

The cost of providing health care benefits will increase an average of 15.4% next year, and expenses for plan sponsors will double in five years if current trends continue, according to Hewitt Associate's Health Value Initiative.

Employers will see the average cost per person for HMO coverage increase to $5,982 next year, while PPO costs will average $6,367 per person. Hewitt analyzed 2,000 health plans covering 300 major employers and 16 million participants for its estimate.

"No matter what the size, industry or location, no organization is safe from major health care increases," says Jack Bruner, national health care practice leader. "Employers simply cannot afford to continue to absorb these types of rate hikes, and unfortunately that means employees will have to pay a lot more for health care."

Responding to the trend, plan sponsors are investing in disease management programs, investigating consumer-driven benefit designs and increasing co pays and deductibles.

President proposes rules to boost generic drug market

Taking the initiative to contain soaring pharmaceutical drug prices, President Bush on Monday proposed new rules that would make generics more readily available. Similar restrictions approved by the Senate remain bogged down in the Republican-controlled House.

Bush's proposal limits the ability of a brand name drug manufacturer to obtain recurring 30-month stays when a generic drug company contests the patent. The change would allow for only one such stay and would give the Food and Drug Administration authority to determine when a generic can enter the market.
"What's significant about this is the president himself has determined this to be a problem," says Brad Cameron, a spokesman for the Business for Affordable Medicine. "The system is broken quite badly. To the extent that you can encourage and improve competition, the more likely you are to bring costs down."

The administration estimates that Bush's proposal would save patients in excess of $3 billion a year. Members of Congress have failed to find common ground on similar legislation. The Senate passed the Schumer-McCain generic drug bill in July, but the measure stalled in the House.