The health industry is in a period of decelerating growth, which is expected to mean a return to single-digit increases in benefit expenses for employers and employees in 2008, according to a new PricewaterhouseCoopers Health Research Institute report, Behind the Numbers: Healthcare Cost Trends for 2008. Based on discussions with private insurers, researchers forecast that medical costs will rise by 9.9% for preferred provider organizations, 9.9% for health maintenance organizations/point of service plans/exclusive provider organizations, and 7.4% for consumer-directed health plans. This compares with estimates of 11.9%, 11.8% and 10.7%, respectively, in the prior year. While the increase in healthcare costs continues to warrant concern as healthcare trends continue to outpace inflation, the trend is declining, reinforcing a longer trend pattern of deceleration, according to the report.
The deceleration in the medical cost trend is influenced by a number of short- and long-term factors. For 2008, the report identified those factors as:
- Slower spending growth for prescription drugs
- Increased transparency and cost sharing with employees
- Total-health-management approach to benefits
- Broadening of the digital backbone in healthcare
