A poll of 200 employers reveals that at least part of a projected health insurance premium cost increase of 13.6 percent will be passed on to employees.

Watson Wyatt surveyed the employers and found that 70 percent plan to reduce benefits or increase employee co-pays.

Watson Wyatt, a global human resources consultant, says the economic downturn, softening labor market, and accelerating health care costs force employers to review costs and shift a greater portion of the insurance costs to employees.

Many of the employers surveyed said they would not change health insurance carriers or move to a more aggressive managed care company. Watson Wyatt found that targeted interventions, such as employers using health management companies, are considered likely or somewhat likely by 60 percent of employers.

The average expected premium cost increases from 2001 to 2002 for active employees are:

• All plans, 13.6 percent.
• Indemnity, 14.4 percent.
• Preferred-provider organization (PPO), 13.7 percent.
• Point-of-service plan (POS), 12.7 percent.
• Health maintenance organization (HMO), 13.9 percent.
• Prescription drug benefits, 17 percent.
• Medical only, 13 percent.
• Dental, 6.7 percent.
• Post-65 retirees, 15.1 percent.

The employers surveyed say they expect to pay even more for retiree medical plans, with much of the increase attributed to prescription drug benefits. Overall, the cost of this benefit is expected to rise an average of 17 percent in 2002.

Watson Wyatt says that health insurance costs continue to climb, and there seems to be no escape from this trend. Strategies from the past, including moving employees to managed care plans, do not offer employers the same promise for relief today. Traditional tactics such as plan design changes and higher employee contributions likely wont be enough to fully offset underlying cost increases, leaving employers with a steadily increasing bill for health insurance.