Employers Healthcare Costs Projected to Rise 9% in 2011

Tuesday, July 13, 2010 by

In a time of much uncertainty surrounding the healthcare reform, according to a June 14th PricewaterhouseCoopers, 'Behind the Numbers Report', employer costs are estimated to increase around 9%.  The good news is this is a drop of 0.5% from 2010 growth rate.  What are the primary contributors?

On the encouraging side, there are three areas expected to deflat or hold medical costs:
  • Pre-managed care design that increases deductibles and replacing co-pays with co-insurnance. 
  • Drugs costs cooled by expansion of generic drug portfolio. High volume drugs such as Lipitor patents expire in 2011.
  • COBRA costs expected to level off.  (side note: Congress has introduced an extension of the subsidy, legislation (S. 3548), that would reinstate through 11/30/2010).
The primary drivers for the inflating costs will be:
  • Hospitals and Physicians move costs from Medicare to private payers/employers. This will be the top reason for higher costs.
  • Care-provider consolidation.  Private practices will decrease while groups emerge.
  • 2011 Stimulus funds will launch electronic hospital records implementations to  avoid 2015 Medicare penalties. This will be a billion dollar invest in to technology.  
Although the primary drivers are out of employers control, your ability to maximize on the deflators is not.  If you are a small to medium size employer contact Management 2000, a PEO Indianapolis.  Let our team of Employee Benefit Advisors and Human Resource Consultants put in place a benefits plan administration that will ensure your success and control costs.

PricewaterhouseCoopers' report is available at www.pwc.com/us/medicalcosts2011.

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