Health insurance is one of the most costly benefits provided by some employers. Numerous factors influence health care increases including: an aging work force, changing demographics in the workplace, new pharmaceuticals, advances in medical technology, eroding profit margins among insurers and managed care companies, and reduction in public sector spending. Current Trends
Total health benefit cost rose by 6.1 percent in 2006, the same pace as in 2005, to an average of $7,523 per employee (Mercer Health & Benefits). If the employer cost of health benefits continues to grow at the rate shown by the Employment Cost Index (ECI) for Health Insurance from 1995 to 2002, employer health benefits will constitute 16.5 percent of total compensation by 2010 (Employment Policy Foundation).
National healthcare expenditures are projected to reach $3.6 trillion in 2014, growing at an average annual rate of 7.1 percent during the forecast period 2003-2014. As a share of gross domestic product, healthcare spending is projected to reach 18.7 percent by 2014, up from its 2003 level of 15.3 percent (Healthcare Financial Management, July 2005).
In 2005, the nation as a whole (government, private sector and consumers) spent $2 trillion, or approximately $6,697 per capita, on healthcare expenditures, and spending increased by 6.9 percent (U.S. Department of Health & Human Services). Between 1980 and 2005, healthcare expenditures increased more than eight times, from $246 billion to $2 trillion (Hoover Institution).
In private industry, healthcare costs account for $1 of every hour that employees are at work (Bureau of Labor Statistics).
In 2005 prescription drug spending increased 5.8 percent compared to the growth of 8.6 percent in 2004. Factors contributing to this slowing trend were a sharp deceleration in Medicaid drug spending and a shift in use toward generic drugs (U.S. Department of Health & Human Services).
The cost of serious workplace injuries is growing faster than inflation. Employee injuries cost U.S. businesses nearly $1 billion per week (Liberty Mutual: Workplace Safety Index).
There were 4,952 workplace fatalities in 2004 due to unintentional injuries. Unintentional injury deaths were up 1 percent in 2004 as compared to 2002 (National Safety Council).
Healthcare costs increased 7.7 percent for major employers in 2006 (Plunkett Research, Ltd.). Employers with fewer than 500 employees saw costs rise by 7.0 percent in 2006, which was a faster rate than 2005. Employers predict another 6.1 percent increase in average cost for 2007 (Mercer Human Resource Consulting).
An estimated 1 billion visits were made to physician offices and hospital outpatient departments in 2003, which is between 3.2 and 3.7 visits per U.S. resident (U.S. Department of Health & Human Resources).
