Health Care Cost Increases Expected to Level Off in 2009

June 18, 2008 ( - Employers have seen the rate of growth in employee health insurance costs decline in the past five years, but a new report from Pricewaterhouse Coopers Health Research Institute says that will level off beginning in 2009.

“Behind the Numbers: Medical Cost Trends for 2009,” which is based on HRI analyses and a survey of more than 500 employers and provider-based health plans, suggest that actual medical costs are expected to grow 9.6% in 2009, compared with a 9.9% rate in 2008 and double-digit annual increases in prior years.

According to a PwC press release, the report indicates employers are responding the leveling off of cost increases in a variety of ways:

  • Wellness programs and initiatives to personalize the experiences of health plan members are on the rise. Health plans, which are competing for a slowly eroding number of employer-based members, are increasingly focused on personalizing member experiences to attract and retain large corporate accounts.
  • Employers will rely on prevention and disease management programs to temper costs in 2009 rather shifting higher levels of cost-sharing onto workers.
  • The number of privately insured continues to slowly decrease, which increases cost shifting, makes it more difficult to control costs, and increases competition among health plans as they try to keep cost growth in check without sacrificing member satisfaction.

The report presents factors expected to help drive medical cost increases in 2009 including:

  • The healthcare industry is in an era of booming construction to replace facilities and adjust to consumer demands, such as a preference for private hospital rooms and a move to outpatient venues.
  • Cost-shifting from the uninsured, Medicare and Medicaid to private payers continues to increase and will account for nearly one in every four dollars spent by private payers in 2009. This trend is expected to continue because the federal government is underfunding public medical insurance programs while the number of uninsured is increasing.

The press release said the continued use of generic drugs, which currently account for two-thirds of all prescriptions (although fewer drug patents will expire in 2009 than in the past two years), will help restrain the rate of cost increase in 2009. In addition, the PwC report notes that improved medical management of high-cost patients, such as programs that improve adherence to medication regimens, is reducing hospitalizations and controlling costs.

The report also points out that a recession in 2009 and the outcome of this year’s election could also effect the costs of medical care and insurance.

The complete PwC report may be accessed at .