Although healthcare costs for U.S. employers are projected to increase by 6%--two-thirds higher than the Consumer Price Index--in 2007, there remains wide variation in per-employee costs among similarly sized companies, according to the Towers Perrin 2007 Health Care Cost Survey. The finding indicates that some companies are succeeding at effectively controlling ongoing cost increases through a variety of benefit management initiatives. The per-employee cost variation between similar companies is about $3,000, which, in a company with 10,000 employees, may add $30 million a year or more to healthcare costs.
Contrary to popular belief, low-cost companies (those with the lowest premium level per employee) are not simply shifting costs to contain costs. In fact, the survey data show that employees at low-cost companies tend to pay less than employees at high-cost companies--approximately $1,728 per year on average versus the $1,884 that employees at high-cost companies will pay in 2007. Low-cost companies are also more willing to take action to reduce costs. For example, 63% of the low-cost companies either have implemented a consumer-driven health plan or will implement one in 2007 versus 38% of the high-cost companies. Low-cost companies offer a variety of health management programs (83% versus 58%) and disease management (84% versus 61%). And low-cost companies are also twice as likely to use extensive healthcare utilization metrics as their high-cost counterparts.
The survey also shows that individuals making minimum wage and retirees younger than 65 are the hardest hit by cost increases, and that employers are becoming increasingly concerned about growing numbers of active employees who are opting out of coverage entirely. Read the news release.
