Survey Shows Health Care Affordability Gap Widens

New data from Towers Perrin indicate that the business and social impacts of rising health care costs still loom large, but also that leading companies are successfully mitigating that threat through a variety of health-focused management techniques that are paying off in significant ways--and point toward broader solutions to the cost crisis.

According to Towers' annual Health Care Cost Survey, the average corporate health benefit expenditure in 2009 will be $9,660 per employee--an increase of 6 percent over 2008 figures. The 6 percent growth rate will make 2009 the fifth consecutive year of single-digit percentage increases. However, according to Towers, many companies and their employees will still face record-high dollar costs in 2009, which is sure to deepen concerns about affordability, particularly for lower-wage workers and pre-65 retirees.

Underscoring the growing affordability gap, the Towers survey database shows that total health care costs have increased by 33 percent since 2004, with the employee share increasing by 42 percent during the same period. In the past, beating CPI was an anomaly, but today 42 percent of high performers have managed to hold their costs at 3 percent or less. Employees at high-performing companies share in this success, paying on average $350 less than employees at low-performing counterparts.

"The most striking result of our survey is the contrast between the high- and low-performing companies," said Dave Guilmette, managing director of the Towers Perrin Health and Welfare practice. "The high performers will pay, on average, 14 percent less in 2009 a differential that quickly adds up to millions of dollars in annual savings for companies and for their employees. While high-performing companies spend almost $1,500 less per employee overall, $350 of those savings, on average, are shared with employees in the form of lower contributions. This shared 'health dividend' also creates important workforce performance advantages, as reported by these organizations such as high employee engagement. Overall, the high performers are reaping a health dividend that can be a source of true competitive advantage and a model for the health care reform debate."

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