SAN FRANCISCO - Aggressive cost-shifting and costmanagement practices helped employers slow the growth in their 2004 health insurance costs to the lowest rate since 1999, though the hike still outpaced inflation, according to a new study.
Health-benefits costs rose 7.5 percent this year, down from a 10.1 percent increase in 2003, according to a survey from Mercer Human Resource Consulting.
Consumer-price inflation is running about 3 percent.
This year’s growth rate refl ects the difference between a 9.6 percent costincrease among employers with 500 or more workers, and a 5.5 percent uptick among those with fewer than 500 employees, said Blaine Bos, a principal at Mercer’s Minneapolis office.
‘‘What we have is a correction,’’ Bos said. ‘‘It looks as though in 2003 there was some overpricing in the market as the trend moved lower.’’
Small employers benefited, especially those in markets with competition between forprofit and not-for-profit health care systems, he said.
‘‘The not-for-profits don’t have any shareholders, so they can’t build up big surpluses,’’ Bos said, noting that state regulators typically guard against their building surpluses in excess of what’s needed to cover risk. ‘‘For-profit insurers need to be competitive, otherwise when the business cycle turns, business will move to the not-for-profits because their coverage will be much cheaper.’’
The total cost of health benefits for employees for all medical and dental plans rose to an average of $6,679 per worker in 2004 from $6,215 in 2003, according to the survey.
The figures include both employer and employee premium contributions, but don’t account for workers’ out-ofpocket expenses.
Another reason costs have ebbed somewhat is that large employers are reaping the benefits of plan changes and cost-shifting that significantly increased workers’ out-ofpocket costs in the last few years, Bos said.
‘‘Because those changes were much larger than salary increases individuals have endured over the last several years, there’s a lingering impact on utilization of those changes made in 2003,’’ he said. ‘‘Employees are being more careful in terms of expenditures because they have higher out-of-pocket costs than they did in 2002.’’
More employers also are seeing returns on their investments in disease-management programs, which are designed to streamline ongoing care for patients with costly chronic conditions, Bos said.