Increase in employers' healthcare costs to slow

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Employers' healthcare costs will increase by an average of 11.3% in 2005, compared to 12.3% in 2004, according to a forecast by consulting firm Hewitt Associates. The 2005 increase easily outpaces inflation.

The average employee contribution for 2005 will be $1,481, up from $1,288 in 2004 and representing 19% of the overall healthcare premium. Hewitt representatives blame increasing healthcare costs as the major reason for the cost increase.

However, changes made by employers are responsible for the slower increase in healthcare costs, contributing to reductions in hospitalization costs and stabilization in prescription drug costs, said Hewitt's Jack Bruner.

A company in 2005 will experience average increases of 11.5% for health maintenance organization plans (HMOs), 11.5% for point-of-service (POS) plans, 11% for preferred provider organizations (PPOs), and 10.5% for traditional indemnity plans. Employee contribution increases will average 15% across all plan types, according to Hewitt estimates.