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Report - Health costs to get higher

June 17 2008

Increases in medical costs slowed over the past five years, but that trend may be ending. A report by the PricewaterhouseCoopers Health Research Institute said medical costs will grow 9.9% this year and 9.6% in 2009.

Rising medical costs are worrisome for employers and workers, according to PricewaterhouseCoopers. Medical insurance premiums tend to move in the same direction as medical costs.

"In the past, employers have tried to restrain increases in the insurance premiums their workers pay by changing their health plans or by increasing co-payments or deductibles. This has helped to keep insurance premium increases lower than the growth in medical costs," said Michael Thompson, global human resource services principal at PricewaterhouseCoopers. "However, employers' use of this strategy may be declining. About one-third of the employers we surveyed said they expected to increase cost-sharing in their medical plans in 2009."

The increase in medical costs stem from several factors, according to the report. These include a boom in healthcare industry construction and a continuing cost-shifting to private payers from the uninsured, Medicare and Medicaid. Cost-shifting will account for almost one in every four dollars spent by private payers in 2009, according to the report.

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