First the bad news: Employer-provided health care costs are expected to rise by an average of 10.5 percent over the next 12 months, potentially nibbling away at workers’ paychecks.

Now the (relatively) good news: That increase would be the lowest in about eight years, and nearly half the 16 percent hike that was projected in 2002.

Whether employees will be asked to pick up the tab for those projected plan increases depends on the employer, says Tom Lerche, a health care practice leader for Aon Consulting in Chicago, which on Tuesday released its 12-month forecast for health care costs. Companies that are struggling financially may be unable to absorb some or all of the additional expenses. Others may limit their employees’ medical plan choices in 2010 to manage costs.

“Some companies will look at our difficult environment—employees have had salary and pension freezes, many others have lost their jobs—and say they’ve borne enough misery and burden and they’ll avoid passing the brunt of increases to employees,” Lerche says. “Some may pass a nominal increase to employees.”

An aging population, increasing patient demand for services, a rise in drug prices and steeper hospital costs contributed to the projection of rate hikes cited by the report. The company surveyed 60 insurers serving more than 100 million insured individuals to create its forecast.

The increase in what insurers expect to pay out in medical claims over the next year is slightly lower than the 10.6 percent hike that was forecast last year. It’s also significantly lower than the projected increases of 14 percent in 2004 and 16 percent in 2002.

Although health care cost increases are in the double digits, they have declined from previous years. That’s partly because more employees are using generic drugs rather than costlier brand-name drugs, particularly when companies offer them incentives to do so, Lerche says.

Employees are also taking advantage of employer-sponsored health and wellness programs to manage chronic illness, which he says accounts for about half of all health care costs. Employee participation in those programs often correlates to fewer medical claims and payouts.

“Companies that have offered employees disease management programs, and offered employees lower drug copayments if they use generics, have seen an impact,” he says. “It lowers the increase over all of medical costs.”

The Aon report also pointed out what many Americans already knew: that the cost of medical care is rising much faster than consumer prices generally.

According to a Kaiser Family Foundation report, employer contributions to health plans rose 119 percent between 1999 and 2008, four times faster than inflation and wage increases. Workers’ contributions rose by 117 percent in that period, from $1,543 to $3,354 for family coverage.

Prescription drug costs often drive those increases. The Aon report projects drug prices to rise by 9.3 percent in the next year, down slightly from the 9.4 percent hike forecast a year ago. In addition, Medicare supplemental plans are expected to go up by about 6.5 percent and Medicare Advantage plans by 7.3 percent, down from 7.3 percent and 7.7 percent, respectively, one year ago.

The projected health plan increases come at a time when Congress is considering health care reform to rein in escalating costs and make medical care more affordable for all Americans. Ellen-Marie Whelan, a senior health policy analyst with the Center for American Progress in Washington, says the Aon report illustrates why reform is needed now.

“We need to change the way the care is delivered,” she says. “We’re currently not measuring patient outcomes. If we pay physicians for getting you better, there’s less incentive to do more and more tests, and more isn’t always better.

“It’s not about restricting care. It’s about providing better care.”

Carole Fleck is a senior editor at the AARP Bulletin.