Managed Care

Lowest health care cost increase since 2001 predicted for 2007













This year, U.S. companies experienced the lowest health care cost increase in eight years, with health care costs per person expected to increase from $7,744 in 2006 to $8,340 in 2007. The overall rate of the increase continues to be a major concern as it outpaces inflation and salary increases. That's according to a recent report by Hewitt Associates, which says average employee out-of-pocket costs, such as copayments, coinsurance, and deductibles, are also expected to increase from $1,489 to $1,627 in 2007.

If growth of health care costs is slowing down, the next question is for how long? Blaine Bos, a partner at Mercer Health & Benefits, says we shall soon "see how well the leading-edge strategies for longer-term cost management — care management and consumerism — are working."

Hewitt expects that preferred provider organizations will experience a 7 percent cost increase in 2007, and health maintenance organizations and point-of-service plans will see an 8 percent and 9 percent increase, respectively.

Average annual employee contributions and out-of-pocket costs

Costs by plan type

Source: Hewitt Associates

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