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Aon Hewitt Analysis Shows Lowest U.S. Health Care Cost Increases in More Than a Decade

LINCOLNSHIRE, Ill., Oct. 17, 2013 /PRNewswire/ — In 2013, U.S. companies and their employees saw the lowest health care premium rate increases in more than a decade, according to an analysis by Aon Hewitt, the global talent, retirement and health solutions business of Aon plc (NYSE: AON). After plan design changes and vendor negotiations, the average health care premium rate increase for large employers in 2013 was 3.3 percent, down from 4.9 percent in 2012 and 8.5 percent in 2011. In 2014, however, average health care premium increases are projected to move back to the 6 percent to 7 percent range.

Aon Hewitt’s analysis showed the average health care cost per employee was $10,471 in 2013, up from $10,131 in 2012. The portion of the total health care premium that employees were asked to contribute toward this premium cost was $2,303 in 2013, compared to $2,200 in 2012. Meanwhile, average employee out-of-pocket costs, such as copayments, coinsurance and deductibles, increased 12.8 percent($2,239) in 2013, compared to just 6.2 percent in 2012 ($1,984).

For 2014, average health care costs are projected to increase to $11,176 per employee. Employees will be asked to contribute 22.4 percent of the total health care premium, which equates to $2,499 for 2014. Average employee out-of-pocket costs are expected to increase to$2,470. These projections mean that over the last decade, employees’ share of health care costs—including employee contributions and out-of-pocket costs—will have increased almost 150 percent from $2,011 in 2004 to $4,969 in 2014.    

“There are many factors that contributed to the lower rate of premium increases we saw over the past two years that we don’t expect to continue in the long-term. These include the lagged effect from the economic recession on health care spending and continued adjustments as employers and insurers phase out the conservatism that was reflected in earlier premiums due to uncertainty around economic conditions and health care reform. Additionally, employers and insurers will now be subject to new transitional reinsurance fees and health insurance industry fees,” said Tim Nimmer, fellow of the Society of Actuaries, member of the American Academy of Actuaries and chief health care actuary at Aon Hewitt. “While we are seeing pockets of promising innovation in the health care industry, we expect to see 2014 premium increases shift back towards the 6 percent to 7 percent range overall.” 

Costs by Plan Type
On average, Aon Hewitt forecasts that companies will see 2014 cost increases of 7.5 percent for health maintenance organization (HMOs) plans, 6.5 percent for preferred provider organization (PPOs) plans and 6.5 percent for point-of-service

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