NCPA - National Center for Policy Analysis

Employers Face Soaring Health Care Costs

April 18, 2002

Employers are bracing for their third year in a row of double-digit increases in health care costs.

  • Companies will probably face average increases of 12 to 15 percent in 2003 -- compared with a projected increase of 12.7 percent this year, according to preliminary estimates by Mercer Human Resources Consulting.
  • The California Public Employees' Retirement System, however, sees premium increases in the 20 to 25 percent range.
  • Experts predict small companies will see some of the largest increases -- and may respond by shifting more of the cost to their workers.
  • Insurance specialists warn that hefty premium increases will probably be a fact of life for the next three to five years.

Factors pushing up the prices of premiums include escalating prescription drug costs, rising hospital admissions and higher labor costs in the health field.

Source: Reed Abelson, "Hard Decisions for Employers as Costs Soar in Health Care," New York Times; and Julie Appleby, "California HMO Costs Soar 25 Percent; Trend May Spread," USA Today; both appeared April 18, 2002. 


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