LINCOLNSHIRE, Ill. - U.S. health care cost increases escalated sharply again this year, but may begin moderating next year, according to human resources services firm Hewitt Associates. For 2005, Hewitt is projecting an 11.3 percent average increase for employers, which is lower than 2004's 12.3 percent increase.

While most large companies will continue to absorb the majority of next year's cost rate hikes, says Hewitt, many are struggling under the continued double-digit increases, and are making plan design changes, such as raising copayments, deductibles, and out-of-pocket limits, and increasing employees' share of health care premiums. Hewitt projects that the average employee contribution for 2005 will be $1,481, representing 19 percent of the overall health care premium, and up from $1,288 in 2004.

"Rapidly increasing health care costs continue to be a major burden for employers and employees," said Jack Bruner, national health care practice leader for Hewitt Associates. "While this problem is clearly not going away, there are some signs of moderation indicating that the cost savings initiatives employers began implementing several years ago - such as disease management and wellness programs and a focus on greater consumerism - are beginning to bear fruit in terms of reducing hospitalization costs, helping to stabilize prescription drug costs and driving more effective utilization."

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Publication date: 11/15/2004