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PPO 2004 Health Costs May Rise 14.8%

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NU Online News Service, Dec. 8, 2003, 4:47 p.m. EST – U.S. health cost trends continue to skyrocket, according to results of a survey released by the Ridgefield Park, N.J.-based human resources consulting unit of Mellon Financial Corp.[@@]

Researchers at the Mellon unit, which once was known as Buck Consultants, asked more than 90 insurers and benefits administrators about 2004 health prices.

Medical costs will be going up about 14% for health maintenance organizations and about 14.8% for preferred provider organizations, the Mellon researchers predict.

A year ago, the researchers found that HMOs were expecting cost increases of about 14% in 2003. PPOs were expecting cost increases of 15.2%.

Although cost increases are easing slightly at PPOs, PPOs continue to have trouble negotiating contracts with doctors and hospitals, and overall costs will continue to increase at a double-digit pace, the Mellon researchers warn.

The researchers also warn against declaring victory in the war against rising drug costs.

The prescription drug cost trend will be down 2.4 percentage points in 2004, but the 2004 drug cost trend will be a painful 17.6%, the researchers predict.