The Price of Healthcare: Get Set for Another Hike
Like death and taxes, healthcare cost increases seem to be one of life's certainties. Employees will pay an average $3,305 for their healthcare in 2007, about 8 percent more than their 2006 tab, according to a survey released this week by human resources consultant Hewitt Associates. Their employers will see a similar increase, to $8,340 per employee for 2007. Though the rise is the smallest in eight years, it still far outpaces expected salary gains of 3.7 percent.
The employee share includes $1,678 for premiums (typically 20 percent of the total annual premium cost) and $1,627 in out-of-pocket expenses like copayments, coinsurance, and deductibles.
Although healthcare costs will rise everywhere, people in some places will get hit harder than in others, depending on health plan competition and demographics, among other factors. Costs in San Francisco, for example, will go up 10.5 percent, more than anywhere else, while Minneapolis-St. Paul's 2.5 percent rise is expected to be the smallest of any metropolitan area.
Employers have been trying many tactics to keep a lid on costs. "The easiest thing is to say to employees, 'We can't afford to subsidize as much anymore, so instead of paying 80 percent we'll pay 60 percent,'" says Dale Yamamoto, a principal and chief health actuary for Hewitt. Indeed, employees have been feeling the pinch of higher copayments and deductibles for years. Some employers are encouraging employees to take health risk questionnaires to help identify their health problems and offering them financial incentives to take part in a disease management program, for example. And many companies are pinpointing providers that give the best care for the price, and steering employees toward them by offering lower copayments for using providers in these "high performance" networks.
Yamamoto advises people to check out any innovations their employer may be making available. "There's a lot of healthcare information that employers are trying to get out to employees these days, but too often it's not used," he says. By getting what you're paying for, you may lower your costs down the road.
advertisement
