Factors That Will Affect Healthcare Costs in 2012

U.S. employers can expect to see healthcare costs rise by 8.5% in 2012, compared to an increase of 8% in 2011, according to a study published by PwC’s Health Research Institute. However, mitigating changes in health benefit plan designs, including increased cost-sharing with employees, could keep employers’ costs increases to an average of 7% next year. Meanwhile, American workers are beginning to show signs of post-recession stress and the effects of delayed care is taking a toll on their health.

The slow economic recovery, unemployment, and reduction in disposable income have caused Americans to seek fewer healthcare services, which led to lower-than-expected growth in employers’ medical cost trends in 2010 and 2011. Based on interviews with health plans, PwC had projected a 9% increase in employer medical costs. However, low utilization led to adjusted estimates in the medical cost trend to 7.5% for 2010 and 8% for 2011 before benefit plan changes. The end of subsidized COBRA coverage in 2010 is offsetting otherwise rebounding utilization growth rates so far in 2011, but employers and health plans expect pent-up demand to put upward pressure on medical costs in 2012.

To help employers design their health benefit, PwC’s Health Research Institute provides annual estimates of how private medical costs will grow over the next year and what the leading drivers of the trend are expected to be.

In this year’s report, PwC identifies three factors that are likely to inflate the medical cost trend in 2012:

We can show you how to save money on your health care costs:

Group Health Plans

• Small Business (2-50 Employees)

Individual / Family Health Plans

• Standard Health Insurance
• Children Only Insurance
• Health Savings Account Plans