U.S. workers, who already have seen their medical expenses double in the past five years, will see their insurance costs rise again next year, both in payroll contributions and out-of-pocket spending.
In 2007, the combined premium and out-of-pocket costs for health-care coverage will climb nearly 8 percent to $3,305 a year, according to an annual study by Lincolnshire-based Hewitt Associates in preparation for open enrollment season.
Companies, meanwhile, will see their health insurance costs rise 7.7 percent, the smallest increase since 1999, to an annual tab of $8,340 per employee.
Even though the rate of increases is smaller than in years past, it results in big money because of larger base premiums.
“The true dollar cost is still a significant amount,” said David Stacey, a principal at Hewitt, a human resources services firm. “The true dollar cost is driving employers to make changes. The easiest thing for them to do is to shift costs.”
Hewitt’s projections, calculated with data from 400 major employers providing health benefits to 18 million people, are reported as an average per individual worker. Employees with single coverage would tend to pay less, and workers with family coverage would tend to pay more.
Companies have watched their premium rate increases slow as several blockbuster drugs have become available in cheaper generic form. They’ve also continued to shift costs to workers to save even more.
Average out-of-pocket costs for workers are also rising as more companies offer high-deductible health plans promoted heavily by the insurance industry and touted by the Bush administration.
Known as consumer-driven plans, they use high deductibles and let employees or the company decide how much they want to spend on medical care. A defined amount of money is then set aside for medical costs. The money is put into a fund to pay for doctor visits, deductibles or co-payments for drugs, and unused amounts typically are rolled over into the next year.
“Employees are starting to buy down their coverage so they will pay less out of their paycheck for premiums, while incurring more expense when they actually see the [medical-care] provider,” Stacey said.
Companies also are stepping up education initiatives and wellness programs or tinkering with health plans to ease costs and make premiums more equitable.
At Lake Forest-based industrial equipment distributor W.W. Grainger, the company’s workers on average will see premium increases of 5 percent to 6 percent in 2007.
But some workers may see slight reductions, because the company is moving to a structure that lowers costs for employees with fewer dependants.
What it will cost you
For workers, health-care premiums are projected to rise to $1,678 a year, or about $140 a month. And workers will be spending nearly as much in out-of-pocket costs, which are rising to $1,627 in 2007.
Premiums: $1,678
Out-of-pocket: $1,627
– The combined annual costs for the average U.S. worker: $3,305
