Employees to share more healthcare costs

December 1, 2001

Pharmaceutical Representative

Faced with double-digit healthcare benefit cost increases in 2002, 56% of employers say they will raise employee contributions by as much as or more than their expected cost increases. In addition, more than 70% of employers are considering benefit reductions or an increase in employee co-pays over the next 12 months, according to a survey released by Washington-based consulting firm Watson Wyatt Worldwide.

Faced with double-digit healthcare benefit cost increases in 2002, 56% of employers say they will raise employee contributions by as much as or more than their expected cost increases. In addition, more than 70% of employers are considering benefit reductions or an increase in employee co-pays over the next 12 months, according to a survey released by Washington-based consulting firm Watson Wyatt Worldwide.

"The economic downturn, softening labor market and accelerating healthcare costs are forcing employers to carefully review their current healthcare strategy," said Maureen Cotter, global practice director for group and healthcare at Watson Wyatt. "In some cases, that means shifting a greater portion of the cost to employees, but employers are recognizing the need to help employees become better consumers of healthcare, which will positively impact healthcare costs."

The survey, based on responses from 200 companies covering 1.4 million employees, revealed that employers expect health plan costs for active employees to rise 13.6% next year, up from 12.2% this year and 8.1% in 2000. The cost of prescription drug benefits is expected to rise an average of 17%.

Retiree medical plans

Employers expect even higher cost trends for their retiree medical plans. Cost increases for post-65 retirees are expected to accelerate from 13.3% this year to 15.1% in 2002. Much of the increase for post-65 retirees is attributed to an 18% expected increase in the cost of prescription drug benefits.

For pre-65 retiree plans, employers predict an overall cost increase of 15% for 2002, with an average increase of 14.4% for medical and 18.4% for prescription drugs.

Education through the Internet

The survey also revealed a growing trend toward using the Internet to help employees become better-educated healthcare consumers. In fact, 75% of respondents said they are likely or somewhat likely to support employee education with Web-based medical information in the coming year.

"The rapidly emerging Web capabilities hold the promise to promote consumerism and employee responsibility - an attempt to bring employees back into the picture in purchasing healthcare services," said Cotter. "Going forward, employers need to keep in mind that programs that are effectively designed, administered and financed can have predictable costs and can positively affect the productivity of the work force." PR

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