The main objective of many HR professionals today is to temper costs by getting employees more involved in their medical care decisions, expenses and overall health. This may be at least partially attributed to the fact that many experts expect health care costs to increase in 2011.

Health Care Cost Projections for 2011

Cost trends are now available for 2011 from various research organizations. The following health insurance cost predictions are based on recent employer surveys.

Hewitt Associates reports that health care cost increases will be the highest levels in the last five years due to rising medical claim costs, the aging population and the changing health care reform landscape. The organization projects an 8.8 percent average premium increase for employers in 2011, up from 6.9 percent in 2010 and 6.0 in 2009. Also, the average health care premium for an employee at a large organization is expected to be $9,821 in 2011, up from $9,028 in 2010. Employees will be asked to contribute $2,209 (22.5 percent) of their total health care premium, which is up 12.4 percent from 2010, when employees contributed $1,966. Employee out-of-pocket costs are also projected to increase to $2,177 in 2011 from $1,934 in 2010.

Hewitt also reports that employers were able to mitigate costs in this difficult economy by cost shifting, negotiating costs with health plans and increasing their efforts to promote preventive care. Of respondents, 95 percent indicate that managing costs is a top business concern. They will reduce these costs by increasing employee cost sharing, conducting dependent eligibility audits, encouraging spouses to enroll in their own employer’s plans when available, consolidating vendors and taking measures to improve their employees’ health.

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In an effort to reduce benefit costs, many employers are of course implementing cost-containment strategies.  Below are some examples:

-    Rewards For Good Health

• Offer financial incentives to employees who have healthy habits and lifestyles or those who participate in wellness programs at work. Penalize workers with higher premiums for engaging in unhealthy activities, such as smoking.
• Offer discounted rates for those who participate in wellness programs and maintain good health.

-    Preventive Care Benefits

• Offer full coverage for employees who seek preventive medical care and preventative drugs without a deductible, including vaccinations, exams and screenings for diseases such as breast, colon and cervical cancer, blood pressure and cholesterol. Starting on the first plan year on or after Sept. 23, 2010, certain plans are required to cover preventive care services at no cost-sharing to the employee under PPACA.

-    On-site Health Centers

• Offer on-site health centers and staff health coaches to provide advice on personal health needs.

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A recent report from a leading pharmacy benefit manager suggests behavioral factors are a cause of hidden costs in prescription drugs. According to Express Scripts’ Drug Trend Report approximately $163 billion dollars is needlessly spent on health care because of the bad habits of the American consumer.

Express Scripts released its findings during a two-day conference hosted by the St. Louis pharmaceutical manager. Express Scripts, one of the largest pharmacy benefits management (PBM) companies in the United States, handles an estimated 750 million prescriptions a year through a network of over 60,000 retail pharmacies.

Their latest findings disclosed that Americans would save a tremendous amount of money if they took their drugs as prescribed, chose generic over brand name prescriptions and ordered their prescriptions by mail.

Dr. Steven Miller, the company’s chief medical officer stated that Americans spend almost twice as much as other countries on health care and if patients would follow the guidelines offered by Express Scripts, the savings would be in the neighborhood of $163 billion.

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