Health care premiums will continue to rise at double-digit rates next year, and more employers will likely shift to bare-bones coverage marked by high initial deductibles and medical savings accounts, a new survey concludes.
Costs are expected to rise 14 percent in 2005 on average nationally, or 1 percentage point less than the rate forecast for this year, according to a survey of 16 insurers providing coverage to 70 million people nationwide. The survey, released this week, was conducted by Findley Davies Inc., a Toledo consulting firm that advises employers on benefit programs.
The results of the survey, which the firm conducts annually, provide some reason for optimism, said Bruce Davis, a Findley Davies principal.
"We're seeing some evidence, at least in the prescription drug area, that people are behaving more like consumers," he said.
Higher co-pays, as well as incentives for use of generic drugs and recommended drugs, are helping employers to slow the rate of increase in drug costs, the survey found.
Still, drug costs could grow as much as 16 percent in 2005, and are expected to account for 20 cents out of every $1 spent on health care, Findley Davies said.
Health care expenses overall continue to be a large and growing burden for businesses and their employees, the survey found.
While lower than the prior year, the expected 14 percent increase nationally is four times greater than salary increases and the inflation rate forecast for 2005, according to the consultant.
Some of the biggest increases will be in Ohio, Michigan, Indiana, and Pennsylvania, where increases are expected to range from 13.7 percent for preferred provider organizations to 16.6 percent for traditional plans.
One of the biggest factors in increases expected next year: the ability of physicians and hospitals to win fee increases is growing because of increasing complaints from patients about restrictions imposed by insurers on use of health care services.
Many carriers are introducing so-called "consumer-driven health plans," and some expect enrollment to approach 5 percent, the consultant said. In these plans, enrollees typically pay initial deductibles of $1,000 or more and businesses give employees a set amount, which they can use to directly pay for health care.
The consulting firm argues that its estimates are often more accurate those of other health care cost studies that look at expectations of employers rather than those of insurers.
Still, Findley Davies notes that the study reflects expectations, which often differ from actual increases. In 2003, for example, health maintenance organizations predicted that costs would rise 15.4 percent when they actually rose 8.5 percent.
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