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June 19, 2009
Report: Healthcare Costs to Rise 9 Percent in 2010

Healthcare costs for employers in the United States are projected to rise by 9 percent in 2010, slightly lower than in previous years but much higher than inflation and wage increases, according to a report by PricewaterhouseCoopers.

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In 2009, medical costs grew by 9.2 percent, compared with 9.9 percent in 2008. The report says that one of the drivers expected to increase medical costs in 2010 is American workers accelerating their use of healthcare in anticipation of losing their jobs and, potentially, their healthcare coverage.

In addition, rising unemployment is resulting in an increase in the uninsured and underinsured population, a drop in membership in commercial health plans and a higher percentage of the population covered by Medicaid, all of which are driving up medical costs trends.

In the last five years, health insurance premiums have increased 4 times faster than wages, a trend that is expected to continue in 2010, the report says.

Employers told PricewaterhouseCoopers that they will shift more of the costs of health insurance to their workers in 2010 while expecting greater responsibility from workers for managing their personal health:

  • 42 percent of employers ssaid they would increase employees' share of healthcare costs.
  • 41 percent said they expect to increase medical cost sharing through plan design changes.
  • More than two-thirds of employers are offering wellness and disease management programs; however, few said they are very effective at lowering costs.

“The recession is creating a tug of war between upward and downward pressures on medical costs,” said Dr. Jack Rodgers, managing director in the health policy economics group of PricewaterhouseCoopers LLP. “Healthcare organizations are finding their revenue falling and are trying to increase prices. However, with most prices holding steady or falling, health plans will put pressure on providers to hold the line on medical costs.”

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