Insurers are projecting medical cost trends in 2007 of 11.9% for preferred provider organizations, 11.8% for health maintenance organizations/point of service/exclusive provider organizations, and 10.7% for consumer-driven health plans, according to a new report, Behind the Numbers: Medical Cost Trends for 2007, by PricewaterhouseCoopers’ Health Research Institute. These estimates of the growth of medical costs are exclusive of any plan design changes or cost-containment measures, so actual premium increases for 2007 will be lower. The report notes that healthcare costs results from a balance of “inflators” and “deflators.” Primary inflators of medical costs, according to the report, are the explosive growth of new diagnostic technologies that allow doctors to order more tests, overutilization of medical services by workers protected from the true cost of medical care, more chronic diseases caused by the aging of the population and the nation’s obesity crisis, and hospital cost shifting. Deflators of medical costs, on the other hand, are greater cost-sharing by workers, price transparency, electronic medical records to reduce administrative costs and duplication of medical tests, and employer-sponsored wellness programs. Read the abstract.
