Increasing Medical Costs And Employer Strategies For 2010

According to the PriceWaterhouseCoopers Health Research Institute's Behind the numbers Medical cost trends for 2010, health spending continues to grow and medical costs are expected to increase in 2010. This information presents challenges for Americans and employers. Employers are planning strategies for next year, including growing wellness and disease management programs, changing employee contributions, and increasing cost sharing.

The report focuses on many of the issues facing employers, and provides information on strategies to cope with the challenges of another increase in health care costs in 2010. Behind the numbers Medical cost trends for 2010 includes the following data:

• Growth in medical costs for 2010 is expected to be 9 percent, slightly lower than in previous years; however, it will still outpace inflation and increases in worker earnings.

• As the recession pounded corporate profits in early 2009, employers surveyed said they were ready to push more of the costs of health insurance to their workers in 2010 while expecting more responsibility from workers for managing their personal health. Regarding which strategies employers were planning to implement over the next two years, improving wellness and increasing cost sharing led all responses.
– More than two-thirds of employers are expecting to expand wellness and disease
management programs.
–– Forty-two percent of employers surveyed said they would increase employee contributions, up from 38 percent in 2008.
–– In addition, 41 percent said they expect to increase medical cost sharing through plan
design changes.

• Increased cost sharing could squeeze workers, many of whom took wage cuts in 2009 because of the recession. In the last five years, health insurance premiums have increased four times faster than wages, a trend that is expected to continue in 2009 and 2010. If employers follow through on plans for increased cost sharing, the affordability gap could grow even larger.

• The economy is creating both positive and negative pressures on medical costs.
–– An unprecedented number of workers are in high-deductible health plans (HDHPs), which are expected to see lower utilization among cash-strapped workers who lack the resources to pay for medical procedures. This trend is expected to slow the rate of medical cost increases.
–– The workers who have retained their jobs, but are fearful of losing them, may be using more services while they still have health insurance.

You can download the report on the PriceWaterhouseCooper's web site by clicking here.