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Nov 28

Is health inflation set to resurge?

From Modern Healthcare’s Daily Dose (www.modernhealthcare.com):

Employers’ healthcare costs may be heading for renewed inflation after three years of moderating increases, according to a survey by benefits consultant Mercer Human Resource Consulting. Among 3,000 firms surveyed, the overall cost of health benefits rose 6.1% this year to an average of $7,523 per employee — which includes covered dependents — the same rate of growth as in 2005. That’s compared with a 12-year high of 14.7% reached in 2002. But while cost increases among large employers slowed to 6.1% in 2006, down from 6.7% in 2005, employers with fewer than 500 employees saw their costs climb 7%, compared with 4.9% the previous year. “So the multimillion-dollar question for employers is: If cost growth in health benefits has stopped slowing, will it now start to accelerate?” Mercer consultant Blaine Bos said in a news release.

The study also found that in 2006 employers began to rely less on direct cost-shifting to workers and more on consumer-driven initiatives to stem cost increases. Average deductibles, copayments and out-of-pocket maximums, which rose rapidly between 2000 and 2005, recorded only modest growth in 2006. Meanwhile, the percentage of employers offering workers a health savings account or other consumer-driven plan tripled to 6% this year from 2% in 2005. Only 31% of the employers surveyed said cost-shifting or scaling back benefits would be important cost-management strategies over the next five years; 43% rated consumerism as important.

About Reed Tinsley, CPA

As a top advisor to physicians, I help increase practice profits by delivering hands-on, expert medical accounting/tax support, practice counsel, and revenue-building strategies. Read more →