Healthcare Costs Seen Rising 5.3% in 2013

Despite rising cost, 88% of companies are committed to providing health benefits through 2015.

The cost of company-provided health care will increase 5.3% in 2012, to $11,507 per employee, according to an estimate by global professional services company Towers Watson, which projects that the employer will shoulder $8,911 of that cost. 

The projected 5.3% increase in healthcare costs next year is down from the estimated increase of 5.9% this year. But Towers Watson’s survey of 400 midsize companies shows that employers are also concerned about incurring the healthcare reform excise tax on high-cost health plans when it kicks in 2018, and 83% plan to cut costs to avoid that. Changing plan options in 2014 or 2015 is being considered by 42% of the companies, while 31% are considering reducing subsidies for the coverage of spouses and dependents.

While the cost of healthcare is rising, more companies are committed to providing benefits to their employees for the 2013-2015 time period.

The survey shows 88% of employers say they will continue to offer healthcare benefits to active employees in the foreseeable future, up from 71% last year. In the near future, 77% of companies see healthcare as a vital component of their employee value proposition.

However, many employers remain uncertain about the future of their healthcare strategy as a result of to healthcare reform. About half the respondents expect “moderate change” in their overall healthcare strategy as a result of the Supreme Court’s ruling. One-third of companies are waiting to make changes to their strategy based on November’s elections or the opening of insurance exchanges, and 72% predict that exchanges will not provide an adequate alternative to employer-sponsored plans by 2014 or 2015.

Health care cost increases have slowed from 5.9% this year to 5.3% for 2013, but employers further worry about incurring the health care reform excise tax in 2018, and 83% plan to cut costs to avoid that. Changing plan options is under consideration for 2014 or 2015 for 42% of companies, and 31% are considering reducing subsidies for coverage of spouses and dependents.

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