How Can You Keep Health Insurance Costs Down?

By Rieva Lesonsky

They say two things are certain in life: death and taxes. To that, I’d add a third: rising health-care costs. According to the latest Behind the Numbers study by PwC’s Health Research Institute, which monitors medical costs, the cost of health care is projected to rise by 8.5 percent next year, an increase from the 8 percent rise in 2011.

But be thankful for small favors. PwC says costs would actually be increasing more, if it weren’t for factors including:

• Cost sharing. More employers are shifting rising medical costs to employees by requiring them to contribute more to coverage or use high deductible plans (the fastest growing type of plan in 2011).
• Price tiering for out-of-network providers. Rising deductibles mean fewer workers will visit more costly out-of-network providers.
• Brand-name drugs going off patent. Generic use will increase in 2012 because some of the most popular drugs go off patent that year. This will cut costs.

PwC says employers who make key changes to their health coverage can keep cost increases as low as 7 percent. Here’s what the employers surveyed say they are doing to that end:

• Eighty-four percent of employers say they will change their health coverage to offset new costs related to health insurance reform.
• Eighty-six percent of employers say they are going to re-evaluate their benefits strategy as a whole.
• Fifty percent of employers say they may significantly change or eliminate company subsidies for dependents’ health insurance.
• Eighty-nine percent of employers say they will increase employee health and wellness efforts.

Employers will have their work cut out for them with that last one, because PwC also found that delays in getting medical care, plus pent-up stress from the recession, are causing U.S. workers to have more health problems. As a result, they’re using medical services at an increased rate.

One reason medical costs increased at a relatively low rate in 2011 and 2010 was because so many Americans were out of work and didn’t have medical coverage. Even those with medical coverage often avoided treatment because they couldn’t afford copays or other costs. But now, stress-induced illnesses are on the rise, and employees can no longer put off treatment, so they’re visiting doctors in larger numbers. And because of delays, conditions have worsened, requiring more intervention and higher costs.

If you’re wondering how health insurance reform will affect your insurance costs in 2012, the answer is that it really won’t. PwC says the next major round of changes, which includes the creation of health insurance exchanges, subsidies to buy private insurance, requiring employers to offer insurance and requiring individuals to buy insurance, won’t begin until 2014.

Image by Flickr user Toca Boca (Creative Commons)

This entry was posted on Friday, July 1st, 2011 at 6:00 am and is filed under Small Business, small business, Workforce. You can follow any responses to this entry through the RSS 2.0 feed.


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