Health-Care Costs Still Rising, Just Not So Fast
There is good and bad news on the health insurance front, according to an analysis of the first 200 responses to Towers Perrin's 2004 Health Care Cost Survey.

Employer health-care costs will increase an average of 12 percent in 2004. That's lower that the 16 percent in 2003 but still the fifth consecutive year in double figures.

"I cannot recall a longer sustained period of double-digit increases in the health care industry," said Jim Foreman, a managing director at Towers Perrin. "Companies are paying twice as much in health care costs today as they paid six years ago."

The average reported 2004 cost of medical coverage for all types of health plans combined is $3,768 per year for employee-only coverage, $7,524 per year for an employee plus one dependent, and $10,656 per year for family coverage, according to the survey.

The price hike for employer-sponsored medical plans is higher for retirees than for active employees, a trend that has persisted since 1999, Towers pointed out. "This is of particular concern to employers who have large post-retirement medical obligations," it noted.

Not surprisingly, employees will continue to be asked to shell out more and more of their health-care costs.

Employees will contribute 19 percent of the total cost for employee-only coverage and 22 percent for family coverage, nearly the same percentages that they paid in 2003, according to the survey.

Those percentages, however, work out to an average of $708 per year in 2004 for employee-only coverage, compared with $576 per year in 2003 and $456 per year in 2002. Employee contributions for family coverage will average $708 per year in 2004, compared with $708 per year in 2003 and $708 per year in 2002.

Retirees, however, will contribute nearly half of the total cost of their coverage. For those under 65, this adds up to an average of $2,160 per year for retiree-only coverage. Contributions for family coverage for retirees under 65 contributions will average $5,796 per year. Retirees 65 and older will pay an average of $1,332 per year for retiree-only coverage; their contribution for family coverage will average $2,784 per year.

The leading causes for these higher costs are higher HMO rates, high core medical and pharmacy fees and usage, sharp increases in the price of hospital services, greater demand for more expensive diagnostic tests such as MRIs and CT scans, and more-frequent use of certain physician specialists.

As for that trip to the dentist: the survey found that dental costs for 2004 will increase just 5 percent.

Short Takes

• The Wm. Wrigley Jr. Co. said chief financial officer Ronald V. Waters will take on the additional role of chief operating officer.
  
  

• DaVita Inc., a provider of dialysis services, said CFO Rich Whitney will be leaving the company to pursue other business opportunities and spend more time with his family. He agreed to remain as CFO for several months to help recruit a replacement and to aid in the transitioning of his responsibilities.
  
  

• Sun Microsystems Inc. said it will take a $1.05 billion charge in its fiscal fourth quarter to write down the value of tax credits on its balance sheet, due to its slower return to profitability.
  
  

• Some bad news on the economy rocked the stock market on Tuesday. The National Association of Purchasing Management-Chicago business barometer dropped to its lowest level since April. The index plunged to 51.2 from 58.9 in August. Economists polled by Reuters had forecast the September index to come in at 57.0, in a range of 56 to 60. A reading above 50 indicates an expanding regional business sector.
  
  

• Also on Tuesday, the Conference Board's consumer confidence report fell to 76.8 from 81.7 in August.
  
  

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