- The Washington Times - Monday, October 10, 2005

The health care bill for U.S. companies in 2005 posted a smaller jump this year, according to a report released yesterday by Hewitt Associates LLC.

Businesses on average spent an extra 9.2 percent on health care costs this year, the first single-digit increase since 2000, according to the annual report by the Lincolnshire, Ill., consulting services firm.

Hewitt’s report projected health care costs for businesses nationwide will climb 9.9 percent in 2006.

That estimate mirrors forecasts released last month by Mercer Human Resource Consulting LLC, a New York consulting firm.

Mercer found companies would have a nearly 10 percent increase in health costs next year if they made no changes in their health plans. But most of the companies surveyed planned to make changes in 2006, which averaged a 6.4 percent increase.

In the Washington area, health care costs on average rose 8 percent this year, according to the Hewitt report. The Washington area benefited from increased competition among health insurers, said Sasha Richmond, a senior health care consultant at Hewitt.

The report credited the slower growth in this year’s health care costs primarily to higher consumer awareness and financial responsibility.

“More employees are looking at health care expenses as their own money instead of something simply provided to them by employers,” she said.

Part of the greater consumer awareness has come from businesses shifting more of the costs onto employees.

Employee contributions to health costs have surged 65 percent from $877 per worker in 2002 to $1,444 this year, according to the report. That contribution rate is expected to jump another 12 percent to $1,612 in 2006.

Workers also have become more aware of their health costs by switching from a managed care health plan to a more flexible physician-network plan, said Kate Sullivan Hare with the U.S. Chamber of Commerce.

Managed care plans generally use a set dollar payment for treatment while network plans require consumers to pay a percentage of the costs, which are typically higher, said Ms. Sullivan Hare, executive director for the chamber’s health care policy.

“I think some people are quite surprised to see how much their annual doctor visits cost. They had probably never paid more than $20 before,” she said.

The growth of health care costs slowed also because of continued consolidation within the health insurance industry, Mrs. Richmond said.

However, U.S. health care expenses easily outpace general inflation and wage rates, said Gary Claxton, vice president for the Kaiser Family Foundation, a Menlo Park, Calif., health policy organization.

“The rate of growth in these costs has come down in the last two years in our surveys, but it is still substantially high,” Mr. Claxton said.

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