Study says employer healthcare costs to rise 12% next year

Employers’ health costs may rise at a rate quintuple the U.S. inflation rate next year, according to an analysis by benefits consultant Hewitt Associates.

Companies apparently will pay an average of 12.6% more for employees’ health insurance in 2006, Hewitt found. Planned company cost increases ranged from 10.4% to 23.6%, Hewitt said in a check of HMOs, which cover about 20% of privately insured Americans.

A study released last week by Segal Company similarly found that healthcare costs for preferred provider organizations (PPOs) were expected to rise about 12.4% (12.7% including drug costs). That’s slightly slower than the previous year’s rise.

Overall, about 40% percent of employers plan to have their workers pay higher deductibles and larger shares of premiums next year, the Hewitt survey found.