Healthcare Premium Costs Jump 60% in Five Years: Report

Americans covered by employer health care plans will pay nearly 59 percent more towards their premium costs in 2008 than they did in 2003, according to Towers Perrin’s 2008 Health Care Cost Survey. Meanwhile, the cost to employers rose 46 percent during that period.

The report also notes that employers’ commitment to providing health coverage for retirees is dwindling and that employees still must meet co-pays, deductibles and co-insurance requirements.

Healthcare industry experts say the extra financial burden on workers is resulting in higher bad-debt expense and write offs for hospitals and private practitioners. One analyst estimates that unpaid co-pays, deductibles and co-insurance now accounts for about 40 percent of for-profit hospitals bad debt expense ("Unpaid Deductibles Sending Providers to the Hospital," Jan. 3).

Dave Guilmette, managing director of the Towers Perrin Health and Welfare Practice, said in a press release that the cumulative effect of rising costs is felt most acutely by lower-wage workers and those who retire before 65. “If we don’t take more steps to bridge the growing gap for these low-wage workers, the workforce and societal implications could be significant,” Guilmette said.

According to the report, the average total per employee premium cost, which includes active and retired employees and spouse and family coverage, was $6,384 in 2003. Of that cost, the employee paid $1,284. In 2008, the average total per employee cost is expected to be $9,312, of which the employee will pay $2,040.

Meanwhile, 47 percent of companies surveyed said they subsidize health coverage for current and future retirees. And those companies that do offer coverage are rapidly increasing the share paid by retirees, particularly those employees who retire before they reach age 65.

This year, health care costs for retirees under age 65 will increase by $492, and the retiree will 50 percent of his health benefit cost, according to the report. Retirees over age 65 will pay $120 more, a 5 percent increase, and pay about 44 percent of their health benefit cost in 2008.

Towers Perrin is a global professional services firm, offering a specialty in human resources consulting and administrative services. Its 2008 Health Care Cost Survey was conducted during August and September of 2007. The 315 respondents represent primarily Fortune 1000 companies.