Aon surveyed more than 70 leading healthcare insurers and found that healthcare costs are projected to increase by 10.9 percent for HMOs, 10.8 percent for POS plans, 11.2 percent for PPOs and 10.7 percent for CDH plans.

This represents rates of increase lower than one year ago, when HMO cost increases were 12.2 percent, 11.9 percent for POS plans, 12.4 percent for PPOs and 12.5 percent for CDH plans.

"Although it is encouraging to see a continuing decline in healthcare trend rates, employers are still challenged by the fact that healthcare cost increases are more than four times general inflation rates, said Bill Sharon, senior vice president with Aon Consulting and director of the study. "For many businesses, healthcare costs continue to be their fastest growing expense."

According to Sharon, there are a variety of reasons for the double-digit healthcare cost increases, including increasing patient demand for healthcare services as the population ages, rising medical technology and hospital costs, increasing price and utilization of prescription drugs, and poor lifestyle choices.

"Fortunately, employers have a number of strategies at their disposal to reduce the rate of these increases," Sharon explained. "Some of the more successful strategies consist of implementing consumer driven healthcare plans, chronic condition management programs and health promotion programs. Coupled with plan design changes and/or employee contribution changes these strategies can reduce an employer's healthcare cost increase by more than half."

Healthcare rate increases for retirees over the age of 65 are projected to be 11.2 percent for Medicare Supplement plans and 9.2 percent for Medicare Advantage plans. For prescription drugs, general pharmacy costs are expected to increase by 9.5 percent, compared with 12.2 percent one year ago. Specialty drug costs will increase by 15.1 percent, down from 17 percent from spring 2006.

The study is available for downloading at http://www.aon.com/us/busi/hc_consulting/hw_redirect.jsp