U.S. firms expect healthcare costs to rise at lowest rate since 1997


Healthcare expenses for U.S. employers are expected to increase next year at the lowest rate 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 increase is partly the result of workers staying away from doctors in the tough economy, the Mercer survey found. Corporate programs to improve employee health also may be having a positive effect, the report said.

“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 healthcare services will directly impact their wallets as well as their employer’s budget.”

Even as the growth rate for costs slows, employers still expect to pass on 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.