Health care cost increases expected to continue

More bad news is coming from the health care front for both employers and employees. According to Hewitt Associates, a global outsourcing and consulting firm, double-digit health care cost hikes are expected to hit U.S. companies again in 2003, marking the highest increase since the early 1990s.

On the heels of last year's national average 13.7 percent rate hike, Hewitt is projecting a 15.4 percent average increase in 2003.

"Unless there is a fundamental change in the way health care is delivered, costs will double in the next five years," said Jack Bruner, national health care practice leader for Hewitt Associates. "This is a major concern for senior management as it impacts the bottom line of companies across the country."

According to Hewitt data, the average employee contribution for 2003 will be 19 percent for his or her own coverage and 24 percent for dependent coverage. On average, Hewitt forecasts that companies will receive 2003 cost increases of 15 percent for preferred provider organizations, point-of-service plans and traditional indemnity plans, and 16 percent for health maintenance organization plans.

The average cost per person increases from 2002 to 2003 for most major companies by plan:

HMOs from $5,157 to $5,982

PPOs from $5,545 to $6,367

POS plans from $5,639 to $6,485

indemnity plans from $6,304 to $7,249

Hewitt's data is derived from more than 2,000 health plans in 139 U.S. markets, including 300 major employers and more than 16 million health plan participants.

Hewitt Associates, which has its headquarters in Lincolnshire, Ill., provides human capital management services to companies. The firm has 86 offices in 38 countries.