Health Care Costs Expected to rise 8.5 percent in 2012

This recent compensation and benefits article by SHRM largely examines PricewaterhouseCoopers' (PwC) Health Research Institute’s recent survey report (Behind the Numbers: Medical Cost Trends for 2012).

Health Care Costs Expected to rise 8.5 percent in 2012

By Cindy Lau-Evans

This recent compensation and benefits article by SHRM largely examines PricewaterhouseCoopers' (PwC) Health Research Institute’s recent survey report (Behind the Numbers: Medical Cost Trends for 2012).

The indication is that , compared to the 8 percent health care cost increase of 2011, U.S. employers can expect an increase of 8.5 percent.  However, mitigating factors like increased cost-sharing with employees and changes in benefit plan designs, will likely keep employer health care costs increases to around 7 percent in 2012.

The article continues that:
The slow economic recovery, unemployment and a reduction in disposable income caused Americans to seek fewer health care 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 percent increase in employer medical costs for both years. However, low health care utilization led to adjusted estimates in the medical cost trend to 7.5 percent for 2010 and 8 percent for 2011 before benefit plan changes.
In addition, the end of federally subsidized COBRA coverage in 2010 is offsetting otherwise rebounding utilization growth rates in 2011, but employers and health plans expect pent-up demand to put upward pressure on the medical cost trend continuing into 2012.

PwC's 2011 survey was completed in the first quarter of 2011. Survey participants included 1,700 U.S.-based companies from 32 industries. Companies ranged from employers with fewer than 500 employees to companies with more than 20,000 employees. In addition, PwC interviewed hospital executives, health plan actuaries and other executives whose companies provide health insurance for more than 80 million people.

To read more of this article as well as other benefits topics related to Health Care costs, HSAs, ERISA, Retirement, Wellness, and more, click: http://www.shrm.org/hrdisciplines/benefits/Pages/default.aspx