Health benefit costs barely rise in 1997

Health plan costs for active and retired workers of private and public sector employers increased by only .2% in 1997, compared to a 2.5% increase in 1996. According to the Mercer/Foster Higgins National Survey of Employer-sponsored Health Plans released by William M. Mercer Inc., a human resources consulting organization based in New York City, health benefits costs for active and retired workers averaged $3,924 per employee in 1997, while averaging $3,915 in 1996.

The survey attributes this virtual cost stagnation to a surge in managed care enrollment. Traditional indemnity plan enrollment dropped from 23% to 15%, while all forms of managed care plans increased. Preferred provider organization enrollment increased from 31% in 1995 to 35% in 1997, HMO enrollment increased from 27% to 30%, and point-of-service enrollment increased from 19% to 20% in the same time period. Consequently, 85% of all U.S. employees are a member of some form of managed care plan.

There are other factors that influence the low cost increase, including low inflation in the cost of medical goods and services, fierce competition for market share among MCOs, and a rapid retiree enrollment shift from traditional indemnity plans to managed care plans.

Henry Anderson, MD, FAAFP, Vice President, Professional Affairs and Chief Quality Officer, Swedish American Health System, 1400 Charles St., Rockford, IL 61104. Telephone: (815) 968-4400. Fax: (815) 961-2463.

Faye Deich, RN, MS, Assistant Administrator, Sacred Heart Hospital, 900 W. Clairemont Ave., Eau Claire, WI 54701. Telephone: (715) 839-4455.

Chris Fallon, CPA, Vice President of Finance and Chief Financial Officer, Atlantic Health System, 325 Columbia Turnpike, P.O. Box 959, Florham Park, NJ 07932. Telephone: (973) 660-3165.

Craig Goscha, MBA, Corporate Vice President, Nebraska Methodist Health System, 8511 W. Dodge Road, Omaha, NE 68114. Telephone: (402) 354-4835.

Ira Meiselman, MBA, Vice President of Managed Care, Atlantic Health Systems, 325 Columbia Turnpike, P.O. Box 959, Florham Park, NJ 07932. Telephone: (973) 889-8325.

Robert Minkin, Chief Executive Officer, Desert Hospital, 1150 N. Indian Canyon Drive, Palm Springs, CA 92262. Telephone: (760) 323-6774.

Wayne Selden, Associate Administrator, Managed Care Services, Alvarado Hospital Medical Center, 6645 Alvarado Road, San Diego, CA 92120. Telephone: (619) 229-7204.

Susan White, PhD, Vice President, The Center for Healthcare Performance Industry Studies, 1550 Old Henderson Road, Suite S-277, Columbus, OH 43220. Telephone: (800) 859-2447. Fax: (614) 457-1113.