Originally created 01/26/99

Study: Health costs rose in '98

If you didn't notice already, health care costs went up last year, at least one national survey reported Monday. And costs to you and your employer may go up even more this year.

The National Survey of Employer-sponsored Health Plans, an annual survey of 4,200 employers with 10 or more workers each, shows total spending on employer-sponsored health plans rose 6.1 percent in 1998, ending five years of nearly flat cost growth.

"For the first time since 1993, costs are going up again," said Lew Yeouze, a consultant for William M. Mercer Inc., a New-York-based consulting organization. "Employees may be expected to pay more."

Employee contributions to health care plans are about 25 percent, he said.

Employers predicted their costs will rise even faster this year. Seventy-two percent of the employers surveyed projected costs to increase an average of 9 percent.

The survey also reported responses of employers in the South and Atlanta.

Figures for Augusta were not compiled.

The survey also showed worker enrollment in HMO and point-of-service plans fell for the first time to 47 percent in 1998, a decline of 3 percent. Companies opted instead for enrollment in less restrictive preferred-provider organizations.

Enrollment in PPOs rose from 35 percent to 40 percent, the survey showed.

Several factors contributed to the rise in costs, the survey concluded.

The average cost of covering both active and retired employees topped $4,000 for the first time, rising to $4,164 per employee from $3,924 in 1997, the survey showed.

Much of the increase was driven by higher costs for each type of medical plan. Preferred provider organization costs rose by 5.2 percent and traditional indemnity plan costs by 7.6 percent. HMO costs rose 1.6 percent -- the first since 1994 -- while point-of-service plan costs rose 2.6 percent.

The high cost of prescription drugs also played a role in the increase.

Employers reported average increases of 13.8 percent, the survey said.

But the overall cost increase also reflects the end of the five-year migration of employees out of traditional indemnity plans into the managed care area of provider discounts and utilization controls, according to the survey.

It is not clear if the movement away from HMOs is a one-time event or if it marks a new trend, Mr. Yeouze said. But it does end the trend toward increased enrollment in them.

Frank Witsil can be reached at (706) 823-3352.


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