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Employers predict health cost rise of 5.6% in 2007

Posted On: Sep. 12, 2006 12:00 AM CST

Employers are predicting that their health care plan costs will increase by an average of 5.6% in 2007, according to a survey released Tuesday by Mercer Health & Benefits L.L.C.

That increase, which would be one of the lowest in years, comes as employers continue to aggressively shift costs to employees and offer new health plan designs, such as high-deductible plans linked to health savings accounts and health reimbursement arrangements, that give employees strong financial incentives to use services in more cost-efficient ways.

"As in the past few years, employers are working to lower cost increases by raising deductibles and other employee cost-sharing provisions," said Blaine Bos, a Mercer consultant in Minneapolis, in a statement.

"But this year, we're also seeing a lot of change in health plan offerings--specifically, employers implementing HSA- and HRA-based consumer-directed health plans," Mr. Bos added.

If employers maintained their existing group plans without making changes, costs in 2007 would increase by about 9%, according to the survey. But just more than 60% of the nearly 1,700 employers responding to the Mercer survey said they are taking steps, such as boosting deductibles or adopting new plan designs, to reduce cost increases.

Last year, group health care costs increased by an average of 6.1%.