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Insurer Analyzes Cost Drivers

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The WellPoint Institute of Health Care Knowledge says factors other than insurance premium increases are responsible for spiking health care costs.

The institute, a health information arm of WellPoint Inc., Indianapolis, notes that insurer profits amount to only about 3% of health insurance premium revenue, and that administrative services amount to about 10%.

The institute says some of the factors most responsible for increases in health care costs are the development of new medical treatments and new diagnostic measures; health care provider inefficiency; increasing regulatory compliance costs; and an increase in the likelihood that Americans in any given age group will have a diagnosis for at least one chronic condition.

Another major factor is the tendency for Medicare, Medicaid and other government health plans to shift costs associated with treating their enrollees to patients enrolled in commercial health insurance plans, the institute says.