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Wisconsin health benefit costs rose 31% more than the national average in '05

The total cost of providing health benefits in Wisconsin rose 9.2% this year, to an average of $9,321 for each employee - 31% more than the national average, according to an annual survey by Mercer Health & Benefits LLC.

Average Health Benefit Costs

Wisconsin: Total costs per employee were $9,321 this year. That's a 9.2% increase over last year's costs.

Midwest: Total costs per employee were $7,584 this year. That's an 8.9% increase over last year's costs

U.S.: Total costs per employee were $7,089 this year. That's a 6.1% increase over last year's costs.

Source: Mercer Health & Benefits

Nationally, health benefits cost $7,089 for each employee this year, the survey found. That works out to $2,232 less per employee than the average in Wisconsin.

This year's 9.2% increase in health benefit costs in Wisconsin outpaced the national average increase of 6.1%.

The Mercer survey, now in its 20th year, included 3,000 employers with at least 10 employees. It is conducted during the late summer, when most employers have solid estimates of their health benefit costs for the year. The survey includes 97 employers in Wisconsin.

Mercer Health & Benefits is part of Mercer Human Resource Consulting, a subsidiary of Marsh & McLennan Companies Inc.

By changing their health plans, including shifting costs to employees, Wisconsin employers expect benefit costs to increase 6.6% next year, about in line with the national projection of 6.7%.

Nationally since 1999, employer-sponsored health plans have increased in cost by 72 percent, according to a Kaiser Family Foundation study. The increases in health benefit costs peaked at 15% three years ago. Since then, the increases have slowed as employers changed the way their health plans were structured, shifting more costs to employees by increasing co-pays and deductibles.

As a nation the U.S. spends 15 percent of its Gross Domestic Product on healthcare, according to the Organization for Economic Cooperation and Development.  That figure is nearly double when compared to most other industrialized nations.  The gap has been created since 1980 when America’s health care expenditures were in line with most other developed countries.  Increased health benefit costs have contributed to the uninsured population rising from 40 million to 48 million persons in the U.S since 2002.

More employers, particularly those with more than 500 employees, are using co-insurance in their health plans. Co-insurance requires an employee to pay a percent of the total bill, up to a set maximum.  Many companies utilize plans with a 20% coinsurance component eschewing former plans based on copayments for services.

As an example for a typical $800 emergency room visit copayment based plans may have a $50, $75 or $100 copayment.  For a plan based on 20% coinsurance the patient would be responsible for $160 of the service cost.

Nationally since 1999, employer-sponsored health plans have increased in cost by 72 percent, according to a Kaiser Family Foundation study.

Mercer's findings match those of other surveys that have shown that health benefit costs continue to rise at a sharp but slower rate than in recent years. Those surveyed also have found that employers continue to shift more of the cost of providing health care benefits to employees.

Susan Rabe, a principal at Mercer Health & Benefits, said employers are beginning to move away from cost shifting and are finding ways to reduce costs through wellness programs, disease management and risk assessment.

"Those are strategies that get to the root cause of costs," said Rabe, who oversees the Milwaukee office of Mercer Health & Benefits.

The goal is to reduce health care costs by helping people stay healthy, particularly the small percentage of workers - many with chronic diseases such as diabetes or asthma - who account for a disproportionate share of health care costs.

Two-thirds of all large employers now offer one or more disease-management programs, according to the Mercer survey. Further, more employers are beginning to offer incentives to encourage workers to participate in disease-management and risk-assessment programs.

General Motors has seen its insurance costs spiral out of control as it now incurs annual health benefit expenses of $60 billion, or $1,400 per vehicle produced.  Employers are slowly moving toward consumerism by offering alternative health plans like high-deductible health plans, generally coupled with health savings accounts, designed to encourage people to shop more wisely for health care.

But that trend is taking hold slower than expected. Nationally, only 1% of all employees are enrolled in so-called consumer-directed health plans.

Rabe noted that employers no longer are placing their hopes on any one strategy.

The Mercer survey also supports others that have found that Wisconsin's health care costs are higher than the national and Midwest averages. Last summer, a report by the Government Accountability Office said physician fees - though not overall health care spending - are higher in Wisconsin than in other states.

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