Employer health costs to rise in 2011

Employers can expect to pay nearly 9 percent more for health care costs for their workers in 2011, the highest level in five years, according to a forecast released on Monday.

And employers will likely ask their workers to 12 percent more of these costs out of their pockets, according to the report from consulting group Hewitt Associates.

The Hewitt report blames higher mostly on medical claim costs and an aging population but also on U.S. healthcare reform, which has become one of the most politically charged issues in the coming November congressional elections as disappointed voters learn they must wait for promised savings to come into effect.

The report projects average health care cost per employee will rise to $9,821 in 2011, up from $9,028 in 2010. Employees will pay $2,209, or 22.5 percent of the total premium, up 12.4 percent from 2010.

After 18 months of waiting for healthcare reform to play out, employers find themselves in a very challenging cost position for 2011, Ken Sperling, Hewitt's health care practice leader, said in a statement.

Sperling said positive effects from healthcare reform, including savings, would take a few years to show up.

The Hewitt report said changes such as allowing adult children to stay on their parents' plans until age 26 and barring insurance companies from denying coverage to children with pre-existing conditions contributed about 1 percent to 2 percent of the total increase, or $8 to $16.

In the meantime, employers continue to struggle to balance the significant health care needs of an aging workforce with the economic realities of a difficult business environment, Sperling added.

Hewitt's report projects an 8.8 percent average increase in health insurance premiums for employers, compared to a 6.9 percent rise in 2010.

Health care premiums will have more than doubled since 2001, from $4,083 to $9,821 in 2011, Hewitt said.

For its forecasts. Hewitt uses a database of census, cost and plan design information for 350 large U.S. employers covering nearly $52 billion in health insurance costs for 14.4 million workers.