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Study predicts how much health costs will rise in 2012

Christian Schappel
by Christian Schappel
June 6, 2011
2 minute read
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How much are you anticipating your healthcare costs to increase next year?
PricewaterhouseCoopers’ (PwC) Health Research Institute estimates that healthcare costs will increase 8.5% in 2012 — and that’s on top of the 8% increase PwC says employers will endure this year.
Those figures come from the organization’s annual survey of medical cost trends. Participants included 1,700 companies from 32 industries, in addition to hospital executives and health plan actuaries.
PwC had projected a 9% increase in healthcare costs for 2011. It blames the initial over estimate on the fact that Americans began using fewer healthcare services due to a lack of disposable income.
Chances are pent up demand will push the cost trend back up in 2012, according to those surveyed.
Factors that PwC says are likely to inflate costs in 2012:

  • Merging of hospitals and physicians to form accountable care organizations (ACOs), as called for in the healthcare reform law. Health plan actuaries say this will reduce competition among providers and drive up payment rates.
  • Decline in Medicare and Medicaid payment rates. Hospitals and actuaries say the difference in payments will shift to private payers.
  • Pent up stress will begin to take its toll. The economic downturn is starting to lead to more stress-induced illnesses, like depression and heart disease.

Factors that PwC says will help hold cost increases down:

  • Increased cost sharing. Employers will shift more healthcare costs to their workers.
  • Numerous popular brand-name drugs will go off patent soon. This will increase the use of generics.
  • Out-of-network use will drop. Employers are making it more cost prohibitive for workers to use out-of-network doctors.

Info: To download the results of PwC’s entire survey, “Behind the Numbers: Medical Cost Trends for 2012,” click here (registration required).
Are your healthcare cost figures falling in line with PwC’s findings? How much are you anticipating your costs to increase next year? Share you feedback in the Reply box below.

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