You’re not alone if you have concluded that you may need to rethink your company’s health care strategy. In anticipation of a second consecutive double-digit rise in annual health care costs next year, 56 percent of employers expect to raise employee contributions, according to consulting firm Watson Wyatt in Washington, D.C.

In addition, more than 70 percent of those surveyed are considering a reduction in benefits or increase in employee co-pays. The survey was based on responses of 200 companies representing 1.4 million employees.

Health care costs are expected to rise 13.6 percent on average in 2002, following increases of 12.2 percent in 2001 and 8.1 percent in 2000. And the cost of prescription drug coverage is expected to soar 17 percent in 2002–one reason employers expect an even higher average increase in the cost of retiree health plans.

In addition, increased layoffs are likely to hike employers’ costs under COBRA, which already is a problem for many industries, according to Edward Kaplan, head of the national health consulting practice of The Segal Co., a NewYork-based consulting firm. In 1999, the actual claim cost per beneficiary under COBRA was $6,051 compared to $3,936 per active enrollee, according to the Employee Benefit Research Institute in Washington, D.C.

The Watson Wyatt survey also indicates that employers plan to help employees become better consumers of health care to help manage future costs. Of those surveyed, 75 percent said they are likely or somewhat likely to support employee education through web-based services.