As employers face ever-increasing costs for health insurance for employees, many will require bigger employee contributions and co-pays in 2003, according to a new survey.

The survey, conducted by Hewitt Associates, an Illinois-based consulting firm, indicates HMOs will increase premiums by an average of 22 percent in 2003. Hewitt gathers HMO-cost information from 140 employers, representing more than one million employees and $4 billion in annual health insurance premiums.

Although complete regional information is not yet available from Hewitt, some anticipated increases range as high as 94 percent. The average HMO premium increase in 2002 was 15.3 percent.

Part of the solution for many employers will be to require employees to pay more of the cost. For example, according to Hewitt data, the number of companies with a $15 doctor's visit co-pay more than doubled from 11 percent in 2001 to 24 percent in 2002, while employers that offer a $10 co-pay dropped from 64 percent in 2001 to 58 percent in 2002.

In addition, Hewitt says employees should expect to pay more for prescription medications. Some insurers have a "preferred medication" list that requires a limited co-pay that will probably increase, and for those who take medicine not on the list, the increase could be substantial, from a current co-pay average of $20 to $50 in the coming year.

The gap between rates for larger employers and rates for those with fewer than 50 employees is also closing, indicating larger companies have lost much of their negotiating leverage with insurers.

"The days of health plans buying market share are over," says Mindy Kairy, e-business leader for Hewitt's Health Management Practice. "This data shows that HMOs are standing strong in negotiations, regardless of the size of the contract. If this continues, it will accelerate the movement to self-funded national HMOs, increase the interest in consumer-driven health plans, continue the erosion of HMO enrollment, and consolidate the number of health plans employers offer."

Hewitt says employers are expected to begin warning employees of upcoming increases earlier this year, rather than waiting for the standard open enrollment period. "Companies just can't afford these increases," says Kairy. "They'll have to be more aggressive than ever in changing their plan designs and employee contributions."