Health care costs are projected to rise more in 2008 than they did this year, but some employers are making progress with cost-containment strategies, according to two studies released yesterday by Hewitt Associates and Towers Perrin.

Although U.S. companies enjoyed a nine-year low in health care inflation in 2007, they should not expect that trend to continue in 2008, Hewitt reports. Average health care inflation was 5.3% this year, down from 7.9% in 2006. However, Hewitt projects an 8.7% average increase for employers in 2008. The average health care cost per person for companies will increase from $7,982 in 2007 to $8,676 in 2008.

Towers Perrin is reporting an even higher dollar amount, predicting the average corporate health expenditure in 2008 will be $9,312 per employee – an increase of 7% over 2007. Towers Perrin says companies with a proactive, successful approach in managing costs – or "high-performing companies" – will pay about $1,500 less per employee compared to the low performers in 2008.

High-performing companies show a deep commitment to managing their health benefits, provide rigorous and effective communications and form transparent benefit designs that allow employees to make sound medical decisions, Towers Perrin notes.

Many employers are mitigating costs and enabling employees to make smarter medical decisions by adopting best practices in benefits, creating more stringent requirements around vendor selection, pinpointing cost drivers, offering new health plan choices and changing prescription drug coverage, Hewitt finds.

Average health care costs for employees – including the employee premium contribution and out-of-pocket costs – are projected to reach $3,597 in 2008, up 10.1% from $3,266 in 2007, according to Hewitt. On average, employee premium contributions will reach $2,040 per year in 2008, an 8% increase that is roughly more than twice that of employees' annual merit increases, Towers Perrin reports.

Employers need to ensure that their health plans are still attractive to workers, consultants say. "While some cost-shifting is appropriate, it's critical that companies design their health care programs in a way that encourages employees to use them – and use them wisely," says Jim Winkler, practice leader of Hewitt's health management consulting business.