Companies say the recession will mean a bigger-than-expectedincrease in their healthcare costs this year, according to a Marchsurvey of more than 400 companies conducted by Mercer. While theconsulting firm's annual survey last summer showed employersanticipated health costs would rise about 6% in 2009, in line withthe increases over the last few years, companies surveyed in Marchput the cost hike at 7.4%.

Mercer data going back to 1988 shows health costs often spike atthe start of a recession. That reflects a pick-up in utilization,says Beth Umland, head of Mercer's health and benefits research. Infact, 15% of the companies surveyed in March say they're alreadyseeing higher utilization this year, and 22% of bigger companies,which are more likely to monitor utilization, are citing a pick-up.“Employees tend to stock services when they think there's a goodchance they're going to lose their job and with it their healthinsurance,” Umland says, adding that employees participating inCOBRA “invariably have higher utilization.”

Given the cost increase this year, companies are working on waysto implement savings next year. Forty-seven percent say they expectto increase the percentage of the health plan premium thatemployees must contribute next year. Another 31% say they plan tointroduce contribution-based incentives and 22% plan to introduce aconsumer-driven or high-deductible health plan for the firsttime.

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Susan Kelly

Susan Kelly is a business journalist who has written for Treasury & Risk, FierceCFO, Global Finance, Financial Week, Bridge News and The Bond Buyer.