Healthcare Cost Increases to Hit 5-Year High in 2011, Hewitt Says

Employers will be feeling the pinch of rising healthcare costs next year, and they’ll be passing those healthcare costs to you, says Hewitt Associates, a global human resources consulting and outsourcing company. According to Hewitt, employers can expect 2011 health care cost increases to be at their highest levels in five years, with an 8.8 percent average premium increase for employers, compared to 6.9 percent in 2010 and 6.0 percent in 2009.

The numbers are depressing:

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.

U.S. Health Care Cost Rate Increases Reach Highest Levels in Five Years, According to New Data from Hewitt Associates

The numbers are even worse in many metropolitan areas. 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).

For more information, visit Hewitt Associates.

Do you expect your healthcare costs to go up next year? Tell us about it!

Related posts:

1. Employers Push Even More Health Insurance Costs on Employees; Increases Average Over $400 Since Last Year
2. Businesses Say Employees Will Pay More for Health Insurance Next Year
3. Anthem Blue Cross Finally Moves Ahead with Health Insurance Rate Hikes; Increases Will Average 14%
4. News: Anthem Blue Cross Intends to Go Ahead with Health Insurance Increases on May 1
5. Employer Health Insurance and Coverage Costs to Jump by 9%, PriceWaterhouseCoopers Reports