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Marquette Wire

The student news site of Marquette University

Marquette Wire

The student news site of Marquette University

Marquette Wire

Cost of health benefits to rise

The cost of living across the U.S. has been steadily rising as the amount of disposable income families have on average has been falling. And another financial hit to consumers is coming in 2012, when the cost of health benefits are predicted to rise about 7 percent nationally, according to a report by Aon Hewitt.

The company, a consulting firm based in Chicago, released a report Monday estimating a 6.7 percent increase in the costs of health benefits next year in Milwaukee, on par with the 7 percent national average. The group surveyed 371 employers that provide 13 million people with coverage nationally.

In a Monday press release, the firm said a number of factors account for the increased cost projections, including a slowed hiring rate, which has led to an older workforce.

The rising prices are especially ominous given the current economic climate, said John Zern, executive vice president of Aon Hewitt.

“In what continues to be an uncertain economic environment, organizations cannot afford health care costs growing at 7 percent each year,” Zern said in the press release, adding that employees will continue to see rising co-pays and deductibles.

The firm said the increase means those companies could be adding the additional 7 percent of expenses to their balance sheets, an action which will affect employees and consumers alike.

Jim McGibany, executive associate dean of the College of Business Administration and an economics professor, said this causes a complex dynamic for companies and their employees. McGibany said in an email that companies looking to keep cost levels about the same will pass on the expenses to their employees.

“Since all employers do this differently, the amount of increase seen by (employees) will be different,” he said. “Some employees may take the risk to go for a plan that has smaller increases in the benefit premiums they pay, but in return they will have to cover more of a deductible if they have some relatively major medical care.”

The rise in costs has meant an increase in the cost borne by employees to offset the large increase.

The amount an individual is on average expected to have to pay will be $2,306, or about 22 percent of the whole premium asked to be paid by the employers, according to Aon Hewitt. The firm projected premiums for an individual at a large company to be $10,475 next year, up from $9,792 in 2011.

In Milwaukee, however, the average individual cost is projected to be higher than the national average, at $12,151.

Marilyn Frenn, a professor in the College of Nursing and an expert on health care costs, said part of the reason for higher Milwaukee costs is the lack of masters and doctoral-educated nurses, which means higher-paid physicians often have to perform jobs nurses could have done.

“In the Greater Milwaukee area, our costs are higher than other regions, both because we have a somewhat older population and because physicians charge higher fees,” she said.

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