PWC: Costs to Rise at Slower Rate in 2011
For the first time, the majority of the insured American workforce will have a health care deductible of at least $400 in 2011 as employers continue to raise out-of-pocket limits, replace co-pays with co-insurance and add high-deductible health plans, according to the annual "Behind the Numbers" report from consultancy PricewaterhouseCoopers’ Health Research Institute.
For the first time, the majority of the insured American workforce will have a health care deductible of at least $400 in 2011 as employers continue to raise out-of-pocket limits, replace co-pays with co-insurance and add high-deductible health plans, according to the annual "Behind the Numbers" report from consultancy PricewaterhouseCoopers' Health Research Institute.
The cost shifting will lead to an expected nine percent increase in employer medical costs in 2011, on the heels of an estimated 9.5 percent increase in 2010, according to PWC.
The biggest inflators is 2011 will be hospital and physician costs, which account for 81 percent of premium costs. One of the inflators will be hospitals' investing billions of dollars in electronic health records software, spurred by the HITECH Act's meaningful use provisions, according to the consultancy. Surveyed hospital CEOs say their largest EHR investments will come in 2011.
Other expected major cost inflators are hospitals continuing to shift costs from Medicare to private payers and employers; and provider consolidation as more physicians get out of private practice and join hospitals or larger group practices. This will give providers more negotiating power with payers, and higher prices in the short term, "though the benefits of consolidation should create efficiencies that moderate rate increases in the future," according to PWC.
In addition to higher deductibles and co-insurance, other factors expected to hold down employer costs include more use of generic drugs ($26 billion in annual brand name sales, including Lipitor, go off patent in 2011) and reduced enrollment in COBRA.
To access the "Behind the Numbers" report, click here.
--Joseph Goedert
The cost shifting will lead to an expected nine percent increase in employer medical costs in 2011, on the heels of an estimated 9.5 percent increase in 2010, according to PWC.
The biggest inflators is 2011 will be hospital and physician costs, which account for 81 percent of premium costs. One of the inflators will be hospitals' investing billions of dollars in electronic health records software, spurred by the HITECH Act's meaningful use provisions, according to the consultancy. Surveyed hospital CEOs say their largest EHR investments will come in 2011.
Other expected major cost inflators are hospitals continuing to shift costs from Medicare to private payers and employers; and provider consolidation as more physicians get out of private practice and join hospitals or larger group practices. This will give providers more negotiating power with payers, and higher prices in the short term, "though the benefits of consolidation should create efficiencies that moderate rate increases in the future," according to PWC.
In addition to higher deductibles and co-insurance, other factors expected to hold down employer costs include more use of generic drugs ($26 billion in annual brand name sales, including Lipitor, go off patent in 2011) and reduced enrollment in COBRA.
To access the "Behind the Numbers" report, click here.
--Joseph Goedert