HEALTH CARE Employers expect steep rise in cost

Health-care costs at small companies could increase by 60 percent, insurance brokers say.
LOS ANGELES TIMES
Employers across the United States expect health-care costs to rise 14.6 percent in 2003, about the same as 2002's 14.7 percent increase, the steepest in a dozen years and seven times the rate of inflation, according to survey results.
Nationally, sharp cost increases are prompting some employers to drop health-care coverage altogether, or switch into so-called consumer-directed health plans, the survey, by Mercer Human Resource Consulting, found. The employee benefits consulting firm polled 2,889 companies nationwide.
The percentage of small businesses -- those employing fewer than 50 workers -- that offered health-care coverage fell to 62 percent nationally in 2002, from 66 percent in 2001, said Praveen Thadhani, a Mercer human-resources consultant.
Some experts say health-care costs could rise even faster than companies are anticipating.
"When you talk to insurance brokers who have their ears closest to the ground, you hear of 20 percent to 40 percent increases for health-care costs in each of the next three years," said Peter Boland, a health-care expert in Berkeley, Calif. "Some are saying 60 percent for small to medium companies."
Hospital charges
Actuaries working with employers on the survey said most of this year's increase came from higher hospital charges, Thadhani said.
A report by the Center For Studying Health System Change found that hospitals were responsible for more than half of the increase in health-care costs because of additional medical tests, treatments and higher hospital prices.
Prescription-drug prices rose 16.9 percent, down from 17.8 percent in 2001 and 18.3 percent in 2000, the survey found.
The influence and popularity of the traditional HMO model, which 10 years ago brought health-care price inflation to a halt, continued to wane.