Survey: Health Care Costs Approaching 25% Of Salary

Compiled By Tonya Vinas If claims costs continue their double-digit increases, the cost of health-care coverage for employees will average nearly 25% of salary in less than five years for many employers. This conclusion comes from the 2003 Segal Health Cost Trend Survey, an annual report from consultants The Segal Co., New York. The report forecasts changes in health plans' per capita claims costs determined by insurance carriers, managed-care organizations, pharmacy benefit managers and third-party administrators. In addition to the projection of 25% of salary, some key findings of the survey include:

  • Rate increases for all medical health-care plans are expected to exceed 14% next year.
  • Prescription drug cost trends are expected to rise nearly 20% in 2003, the fastest rising cost component of health-care plans for the seventh year running.
  • Costs for both hospital and physician services are projected to grow more than 13% in 2003, significant contributors to medical plan cost increases.
  • Costs in the Western region of the U.S. are expected to rise faster than in the East and Midwest.
  • Actual average medical cost trends of those surveyed in 2001 exceeded their projections.
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