Reports Show Strain of Health Costs

If you need any more evidence that the growth in health-care costs is unsustainable, take a look at two reports out this week.

Today, the Medicare trustees issued their annual assessment of the government insurance programs fiscal health. The prognosis: the trust fund (covering hospital stays) will be exhausted in 2024, as the WSJ reports. Thats five years earlier than they predicted last year; the sluggish economy has led to lower payroll taxes, but health costs keep going up.

And even that forecast comes with an asterisk. The long-term outlook for the trust fund and the Medicare Part B program, which pays for physician services, depends on assumptions that are inevitably highly uncertain, the report says:

New technologies and interventions will continue to expand the capabilities of medicine and to affect the cost of health care in ways that are difficult to predict. Private stakeholders are redoubling their efforts to curb cost growth, but the extent of their success and the effects of these endeavors on Medicares costs are yet to be determined. Also unknown is how effective the significant federal health legislation enacted in 2010 will be at moderating cost growth for Medicare. If the legislations cost-reducing innovations in the delivery of and payment for health services were not successful, or if health care providers could not accommodate the slower growth in Medicare payment rates mandated by the new law, Medicare costs would be significantly higher than shown in the Trustees Report.


But its not just Medicare thats going to be strained. The latest Milliman Medical Index, which measures the total cost of health care for a typical family of four covered by a preferred provider plan (PPO), rose 7.3% to $19,393 in 2011. The per-employee cost more than doubled between 2002 and 2011. And the employees share of that cost now stands at 39.7%.

Outpatient care had the biggest cost hike, at 10%, followed by inpatient care (8.6%), pharmacy costs (8%) and physician care (4.4%).

And that health-care overhaul law? It isnt yet significantly driving or curbing costs, the Milliman report says. But as with the Medicare trustees, researchers point to certain elements of the law that have the potential to do so in the future, namely changes in minimum coverage requirements, insurance premium rate reviews, the individual mandate and expanded Medicaid coverage and health-insurance exchanges scheduled to roll out in 2014.

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This entry was posted on Thursday, May 12th, 2011 at 11:34 pm and is filed under Health Care. You can leave a response, or trackback from your own site.

One Response to “Reports Show Strain of Health Costs”

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