Report: Health Care Costs to Rise 9% in 2010

Employers who offer health insurance
coverage could see a 9 percent cost increase next year, and their
workers may face an even bigger hit, according to a report from
consulting firm PricewaterhouseCoopers.

Costs will rise in part because workers worried about losing
their jobs are using their health care more while they still have
it, the firm said in the report released to The Associated Press.
The report also said rising unemployment is driving up medical
costs.

Health care reform legislation currently being hashed out in
Congress likely will have little impact on next year's costs, said
PWC principal Michael Thompson. But he noted that the intense focus
on health care may slow price increases.

"Nobody wants to be front page news when all the lights are
shining on your industry," he said.

The report projects the expected cost increase per person for
employee benefits plans, and it factors in things such as price
increases, as well as utilization changes.

Businesses confronted with increases will likely pass some of
the burden to employees via higher premiums, deductibles or copays,
Thompson said.

"If the underlying costs go up by 9 percent, employees' costs
actually go up by double digits," he said, noting that will have a
"major, major impact" when many employers also are freezing or
cutting pay.

A total of 42 percent of employers surveyed said they would
increase employees' share of costs.

The 9 percent increase predicted for 2010, however, represents a
slight decrease from the 9.2 percent PWC projected for this year,
and 9.9 percent predicted for 2008. A growing use of generic drugs
has helped tame spending, according to the most recent survey.

Actual cost increases for this year and last were not available.

PWC surveyed more than 500 employers and health insurers. One of
the factors it found that may increase medical costs next year is
the lingering threat of unemployment. Workers worried about losing
their health coverage along with their jobs tend to seek medical
care they might otherwise put off.

PWC also said health care providers tend to shift costs to
private insurance plans to make up for the revenue drop they see
from a rise in the uninsured population or from an increase in the
percentage of people covered by Medicaid, the state-federal
insurance program for the poor.

Georgetown University health economist Jean Mitchell said she
sees one main reason behind any health care cost increase:
overutilization. Mitchell, who was not involved with the survey,
said health care costs have been rising faster than inflation
because the payment system rewards care providers for doing more.

"Until we fix that, we're never going to be able to rein in
health care costs," she said.


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