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Employer Sponsored Health Care Costs Slow Down This Year

by Vanessa Jones on May 16, 2014 at 3:15 PM
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 Employer Sponsored Health Care Costs Slow Down This Year

In the United States the employer sponsored health care plans are moderate this year according to a research by Buck Consultants. After a survey of 126 U S insurers and health plan administrators, where the services covered 119 million people, moderation was evident in all types of plan structures.

High-deductible health plans (HDHPs) show the biggest decline in cost increases, rising 8.6 percent this year compared to 9.1 percent in 2014. Hikes for health-maintenance-organization (HMO) and point-of-service (POS) plans ticked down as well. For plans that supplement Medicare, though, the health-cost hike has spiked to 5.5 percent from 4.1 percent last year.


Harry Sobel - a co-author and consultant for Buck felt that a reason for the slowdown could be that consumers are forgoing medical treatment since several years. The impact of the public and private health insurance exchanges would be known after a few years. The trend of lower costs is not an advantage to plan-sponsoring companies as health costs are currently rising faster than the rate of US inflation. . "Even though the decline is good news, most plan sponsors still find 8 to 9 percent cost increases unsustainable," says Sobel.

Increased costs result from high use of diagnostic tests and treatments, lowered reimbursements from Medicare and Medicaid programs and hospitals negotiating with managed care organizations. Research and development of new technologies add to overall health care costs. "While technology may ultimately be the key to containing health-care cost increases, [R&D] costs often result in higher initial costs for services," Buck wrote in its survey report. Another big cost driver is research and development for new medical technologies, of which there's more all the time. "While technology may ultimately be the key to containing health-care cost increases, [R&D] costs often result in higher initial costs for services," Buck wrote in its survey report.

Meanwhile, cost increases for employer-sponsored health plans outside the United States are heading in the other direction, according to Towers Watson. Its research shows costs rising globally by an average of 8.3 percent in 2014, up from 7.9 percent last year and 7.7 percent in 2012. The trend is worst this year in the Middle East/Africa region (10.0 percent) and best in Europe (5.4 percent). Costs are up this year by 9.7 percent in the Americas (other than the United States) and 9.3 percent in the Asia-Pacific region.


Hannah Punitha (IRDA Licence Number: 2710062)

David McCann, May 2014

Source: Medindia

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