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Slowdown in Health Benefit Costs Continues, Study Finds

NOVEMBER 22, 2005 -- The cost of health benefits is predicted to increase 6.7 percent next year, continuing a three-year slowdown in cost increases, according to an annual study of employer-sponsored health plans.

The report, compiled by Mercer Health & Benefits LLC, also shows that employers limited their health plan increases to 6.1 percent in 2005 through a variety of initiatives, such as cost-shifting and changing vendors.

Nearly 3,000 employers participated in the survey, with results representing about 600,000 employers and more than 90 million full- and part-time employees.

Other highlights of the report include:

  • Fewer small employers offered health care coverage in 2005 despite the availability of low-cost consumer directed health plans.
  • Employers with 20,000 or more workers were most likely to offer consumer-directed health plans.
  • Employers relied on cost shifting in the form of higher deductibles and co-payments for employees to keep health care costs low.
  • Employers are seeing cost savings from disease management programs for employees with chronic medical conditions, such as diabetes or heart disease. Two-thirds of large employers now offer one or more disease management programs, the study found.

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