The lid on the cost of health-care plans popped off in 1988 as the expense per worker of employer-sponsored programs shot up 18.6 percent, a survey shows.
The jump came after increases of 7.7 percent in 1986 and 7.9 percent in 1987, and "there doesn't appear to be much relief in sight," according to a report released Monday by A. Foster Higgins & Co., a New York-based benefits consulting firm.Health insurers absorbed some of the unexpected cost increases last year and will pass them along this year, ensuring another big rise, said John Erb, who conducted the survey.
The average cost per employee of health care plans was $2,354 in 1988, up from $1,985 in 1987, according to the survey of more than 1,600 employers, whose plans cover 10 million workers and dependents.
The figures include the cost of plans to employers and employees.
The medical-care component of the U.S. Labor Department's Consumer Price Index rose 6.9 percent last year, making it the fastest-growing part of the inflation measure. But the cost of services is only part of the problem for employers and employees, Erb said.
According to Erb, these were some of the factors in last year's rise:
-Expensive medical services such as heart and liver transplants are becoming more widely available, so more people are using them.
-The federal and state governments, strapped for money, are holding down how much they pay health-care providers for Medicare and Medicaid patients. That forces the providers to raise their prices to other customers.
-Doctors are raising fees for outpatient services because patients tend to be more highly reimbursed for them and are less likely to complain. The higher reimbursement was intended to encourage use of outpatient services, which are generally cheaper than hospital care.
-Doctors are requiring more follow-up visits, some of which may not be necessary.