Employers' Health Care Cost Growth Expected To Slow Next Year; Report Estimates Growth At 10.6%

Main Category: Health Insurance / Medical Insurance
Article Date: 13 Aug 2008 - 6:00 PST

email to a friend   printer friendly   view / write opinions   rate article

Health care costs are expected to increase by 10.6% into next year, the smallest increase in six years, according to a report by Aon Consulting Worldwide, the AP/Baltimore Sun reports. For the report, study director Bill Sharon, a senior vice president at Aon, and colleagues surveyed about 70 U.S. health insurers regarding their 12-month rating periods beginning this year between April and September. According to the AP/Sun, costs continue to rise to keep pace with increasing patient demand for services, necessities for an aging U.S. population and higher prescription drug and technology costs.

The 10.6% projection is slightly smaller than Aon's 2007 forecast of 10.9% and is far lower than 2002 estimates of more than 16% (AP/Baltimore Sun, 8/12). However, the health care growth rate still outstrips the national rate of inflation, the San Francisco Chronicle reports. Aon officials said that employers could reduce the growth rate of their health care costs by three to four percentage points by instituting cost containment strategies, such as wellness and disease management programs (Colliver, San Francisco Chronicle, 8/12).

According to the AP/Sun, experts say the report indicates that nationwide efforts to reduce health costs have been effective. Sharon said that employer wellness programs have helped reduce health care cost growth. In addition, he said that efforts by health care providers also have contributed to curbing growth. Robert Zirkelbach of America's Health Insurance Plans said that health insurers have contributed by enacting disease management programs and encouraging plan enrollees to use generic drugs instead of more expensive, brand-name drugs.

Health care cost growth has declined each year since 2002, according to Aon forecasts. However, Sharon said that the reductions in growth have gotten smaller each year, signaling that current cost-containment strategies are reaching their maximum potential (AP/Baltimore Sun, 8/12).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.