Individual rates to climb despite lower health cost increases

WASHINGTON (AP) — The next few years could be great for employers that sponsor group health plans but hard on self-employed people and others who buy their own individual or family coverage.

Analysts at PricewaterhouseCoopers’ (PwC’s) Health Research Institute give that assessment in a new study.

The analysts predict that direct medical care costs will increase by 6.5 percent next year. Earlier, the analysts were predicting that costs would go up 7.5 percent.

The cost of care is the biggest component of premiums, followed by administrative expenses and overhead.

“There are some underlying changes to the system that are having an impact, and we can expect lower increases as we come out of the recession,” said Mike Thompson of the PwC institute.

Cost “is still going up, but not as much as it used to,” Thompson said.

PwC analysts said the following factors might help to hold costs down in 2014:

• Patients seeking more affordable routine services in settings like clinics springing up in retail stores, as opposed to a doctor’s office or the emergency room.
• Major employers contracting directly with hospital systems that have a proven record for complicated procedures such as heart surgery and certain back operations.
• The government ramping up penalties on hospitals that have too many patients coming back with problems soon after being discharged.
• Employers’ ongoing effort to shift more costs to workers through higher annual deductibles, the amount people must pay each year before insurance picks up. 

Factors that could push health care costs up include the high cost of specialty drugs, such as drugs for cancer, and health care provider consolidation.

One downside of the demand for greater efficiency by employers and government is that it may be fostering new health care monopolies, the PwC analysts said.