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Employer healthcare costs expected to slow in 2012

September 21, 2011 | 11:13 am


Healthcare expenses for U.S. employers are expected to slow next year to their lowest level in more than a decade, but the cost of benefits for workers is likely to outpace the growth of their earnings, a national survey has found.

Companies expect their bills for health benefits to rise 5.4% on average next year, the smallest increase since 1997, according to preliminary results from a survey of nearly 1,600 employers by benefits consulting firm Mercer.

The smaller increase reflects cost-cutting efforts by employers. Many are moving workers into lower-cost health plans or slashing expenses by raising insurance deductibles.

In the absence of any cost-cutting, employers said they expect their average health benefit costs to rise 7.1% That’s down from about 9% each of the last five years.

The lower overall expenses are due partly to workers staying away from doctors in the tough economy, the Mercer report found. It said that corporate programs to improve employee health also may be having a positive impact.

“Earlier risk identification and health education … are keeping people with health risks and chronic conditions away from the emergency room,” said Susan Connolly, a Mercer partner. “And consumers are more aware that overuse and misuse of health care services will directly impact their wallets as well as their employer's budget.”

Even as the growth rate in costs slows, employers still expect to pass many costs to workers by raising deductibles, co-payments to visit the doctor or contributions to insurance premiums, the survey found.

Mercer said its survey offered an initial forecast for 2012 and that final results from 2,800 employers will be released by the end of the year.


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-- Duke Helfand

Photo credit: Los Angeles Times