Consulting Firm Projects 9% Rise in Healthcare Costs for 2010
The consulting firm, PriceWaterhouseCoopers (PWC), has released a report that projects a 9% rise in healthcare costs employers can expect to pay in 2010. The report also projects employers will pass some of that cost along to its insured employees, making projected individual cost increases jump into double digits.
Michael Thompson, PWC, says the healthcare reform measures being debated in Congress this year will have little, if any, impact on next year’s expenditures. Thompson did suggest the intense scrutiny currently being placed on the healthcare industry may actually slow the rate of price increases.
The PWC report identifies cost increases and rising unemployment rates as the main driving forces behind its projected cost increases to employers and employees. Changes in the way Americans are currently utilizing their medical coverage are also impacting cost.
While no figures are yet available to confirm projections for 2008 and 2009, PWC predicted 9.9% and 9.2% cost increases for those years, respectively. Its report identifies a higher rate of patients using generic drugs as the reason for slowing the projected rate of cost increase over these three years.
If employer costs go up as expected, the report suggests employee costs will go up accordingly, since 42% of the 500 employers and health insurers it surveyed for the report say they’ll pass that increased expense on to their employees. These employee costs will come as premium increases and higher co-pay and deductible expenses. These increased employee expenses are described by Thompson as being a ‘major, major impact’ on employees overall income, since they’ll be coming at the same time many employers are freezing wages and salaries or making pay cuts.
The high rate of unemployment expected next year will impact healthcare expenses, too. One way it will do so is by forcing once-insured patients to turn to Medicaid for healthcare needs, a move that is expected to drive up the cost of health care in general. Healthcare providers will likely shift revenues lost to Medicaid to their private, employer-based, insurance providers. These higher employer prices will be passed along as higher employee costs for coverage.
In anticipation of losing a job and the healthcare coverage that comes with it, a growing number of Americans are now getting medical care that they might otherwise delay. This trend toward overutilization of services is also having an impact on healthcare expenses.
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One important aspect of the increased costs of delivering healthcare in a hospital setting. For example, the CDC has estimated that over 60% of hospital emergency department (ED) visits are for non-life-threatening conditions that are not true emergencies. A common misunderstanding is that these unnecessary ED visits are by patients who do not have insurance. CDC data, however, show that most of these low-acuity ED patients actually are covered under healthcare insurance or other third-party payors. Lee Resnick, MD former President of the Urgent Care Association of America has summarized this data regarding An much more cost-effective alternative to the hospital ED is the community urgent care center. Proper use of an urgent care instead of a hospital ED would result in over $5-billion in savings to the healthcare system. Data from customers of a leading indicate that urgent care visits rose by almost 20% during the recent H1N1 flu outbreak. This indicates that many in the community are aware of the usefulness of urgent care for illnesses of a mild to moderate acuity. It, also, indicates the critical importance of improving public awareness of proper use of urgent care centers. This will be needed to reduce the incredible demand on hospital emergency departments that a raging flu pandemic might create.