Health costs of US employers at 5-year high -study

Mon Sep 27, 2010 11:54am EDT

* Health insurance premiums double since 2011

* Employees shoulder 22 percent of premiums

WASHINGTON, Sept 27 (Reuters) - U.S. 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 employees will have to pay more than 12 percent more out of their pockets, according to the report from consulting group Hewitt Associates HEW.N.

The Hewitt report blames higher medical claim costs, an aging population and U.S. healthcare reform.

Dubbed "Obamacare" by opponents, this legislative victory for President Barack Obama has become a lightning rod for Republicans opponents ahead of the November congressional elections. Republicans are expected to gain seats in Congress, but not enough to win the majorities they would need to fulfill their pledge to repeal healthcare reforms.

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. Many of its provisions do not take full effect for several years.

"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.

For instance, the new law lets parents keep their children on their health plans until their 26th birthday, something the White House says can add up 2.4 million young adults to plans.

Another measure bars insurance companies from denying coverage to children with pre-existing conditions.

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.