U.S. News

Health Care Costs for Businesses Continue to Surge


Companies' health costs rose at roughly twice the rate of inflation, jumping 8% last year, according to a survey today.

The survey, by consulting firm Watson Wyatt Worldwide, found that while 38% of companies now offer consumer-directed health plans, which combine high deductibles with tax-advantaged savings accounts, the median employee enrollment rate in the plans is a relatively low 8%.

Experts have said the plans will bring down health care costs because they make patients more financially accountable for their spending decisions; one of the ideas behind them is that people spending their own money will shop around for cheaper health care. President Bush promoted the plans in last year's State of the Union address.

Separately, the survey quantified a change in retiree benefits. Only 33% of new hires will receive financial support for retiree medical coverage from their employers, compared with 43% of current employees.

Watson Wyatt surveyed more 573 companies; the companies have a total of 11 million employees.