U.S. employers should expect 2011 healthcare cost increases to be at their highest levels in the past five years, according to an analysis by Hewitt Associates.
Higher medical claim costs, an aging population and changes brought about by healthcare reform are the major factors in the increasing rates.
Premiums are set to rise by an average of 8.8% for employers in 2011, compared to 6.9% in 2010 and 6% in 2009.
According to the Hewitt report, the average total healthcare 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% of the total healthcare premium.
An increase in claims, especially those of the catastrophic variety, is driving up costs. Slower levels of hiring have also left employers with slightly older workforces who are more prone to costly medical conditions.
And, the most immediate applications of U.S. healthcare reform—including covering dependents to age 26 and the elimination of certain lifetime and annual limits—contributed approximately 1%-2% of the 8.8% projected increase for 2011.
“After 18 months of waiting for healthcare reform to play out, employers find themselves in a very challenging cost position for 2011,” said Ken Sperling, Hewitt’s healthcare practice leader.
“Companies cannot afford to take a ‘wait and see’ approach to healthcare benefits. Now is the time for organizations to be bolder about the strategies, programs and tactics they’re using to contain cost and motivate employees to engage in their own health.”
Another recent Hewitt survey of 600 large U.S. companies indicated that employers have grown increasingly concerned about rapidly rising healthcare costs. Almost all (95%) of companies said managing costs is a top business issue, and they are looking to reduce the burden by increasing employee cost-sharing, cracking down on dependant subsidies, being more selective on vendors, and improving overall employee health.