Health care costs lag behind inflation, for now
Health care costs lag behind inflation, for now
Medical costs of U.S. businesses rose only 2.5% in 1996, according to a report by Foster Higgins, a health care consulting firm. That rate lagged overall inflation but outpaced the 2.1% rate posted in 1995.
The continuing shift of workers into managed care plans and declining HMO coverage costs led to the anemic increase, Foster Higgins suggests.
But costs will escalate if managed care premiums rise and Medicare cuts accelerate the shifting of costs to private payers, Foster Higgins warns.
In a nationwide survey of more than 3,200 employers, health care benefits costs averaged $3,915 per employee compared to $3,821 per employee in 1995, Foster Higgins found.
HMO costs fell 2.2 percent in 1996 to $3,185 per active employee, when national HMO enrollment reached 27%, unchanged from 1995. While HMO enrollment stalled, however, point of service plans continued to add enrollees, the study found.
Point of service (POS) enrollment rose to 19% from 14% the previous year. The cost of POS health plans increased 2.3% in 1996, to $3,494 per employee.
Meanwhile, enrollment in preferred provider organizations increased from 29% to 31% of the nation, the study found.
Managed care plan costs grew at a slower pace over the last four years than indemnity plans, the survey found. Since 1993, indemnity plan costs for active and retired employees rose a cumulative 19%, preferred provider costs rose 8%, and HMO costs rose 3%, the study said.
Among large employers, with 500 or more employees, 30% of retirees were enrolled in managed care, which is credited by Foster Higgins for holding in check average health care costs for employees.
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