June 18, 2002

UCLA Anderson Forecast Survey Shows That Burden of Health Care Costs Will Continue to Fall on Employees

Los Angeles — A health care survey conducted by the UCLA Anderson Forecast of 460 companies across the United States indicates that as health care premiums continue to rise, employers will increasingly shift the burden of costs to their employees. The results will be further explored at the next quarterly UCLA Anderson Forecast Conference on Wednesday, June 19, 2002.

Eighty-five percent of those polled in the survey have seen their health care premiums rise by at least as much as 10 percent over the past plan year, according to Dr. Christopher Thornberg, senior economist with the UCLA Anderson Forecast. Twenty-five percent of survey respondents saw their premiums rise by more than 20 percent.

"What's interesting about these results is that companies believe that the current premium health care increases are just the beginning of a longer trend," Thornberg said. "Specifically, 80 percent of the companies surveyed anticipate that premiums will continue to rise by another 10 percent, while one quarter believe that increases next year will be more than 20 percent."

Of those companies who responded to the survey:

27 percent reduced the level of benefits coverage
41 percent increased premiums on coverage for dependents
65.5 percent raised employee contributions to personal premiums
75.5 percent raised co-payments or deductibles.

The difference between the situation now compared to that in the late 1980s and early 1990s is that many employers are now simply passing on the increased healthcare costs to their employees, Thornberg said.

Thornberg noted that companies that altered their plans this year are more likely to transfer rising health care costs to their employees in the future. Forty-two percent of respondents from companies that did alter their plans believe it is likely that the company will revise its plan again in the future if premiums continue to rise.

The surveys were completed by human resources managers representing a variety of large and small businesses. Specifically, companies were asked how much their premiums rose over the past year, how the company responded to the change, and what they felt the outlook was for the company's health care benefits.

The informal survey was administered in preparation for the June 19 conference titled "What Every Business Needs to Know About the Current Health Care Crisis," which will feature a variety of participants, including doctors, health care executives, management consultants, hospital and health care administrators, and county and state government officials. Keynote presentations will be made by Dr. Thomas Garthwaite, director of the County of Los Angeles Department of Health Services and former under secretary for health, U.S. Department of Veteran Affairs, and Leonard Schaeffer, chairman and CEO, WellPoint Health Networks. Through several insightful panel sessions, the conference will address several key issues affecting the current health care crisis including, why medical costs are rising, what can be done about it, and how to understand the tough health care choices that businesses and government will need to make.

For more information on the health care survey results or to register for the UCLA Anderson Forecast conference on Wednesday, June 19, please call 310-206-7707. Please visit www.uclaforecast.com for program updates. The lead sponsor for the June Forecast conference is Deloitte & Touche, and co-sponsors are HealthNet, K&R Law Group, Tenet Health Systems and WellPoint Health Networks.

The UCLA Anderson Forecast is one of the most widely watched and often-cited economic outlooks for California and the nation, and was unique in predicting both the seriousness of the early-1990s downturn in California, and the strength of the state's rebound since 1993. Most recently, the Forecast is credited as the first major U.S. group to declare the recession of 2001.

Media Relations