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  • Study of Health Care Costs Shows Moderate Rise for 2012

    According to a recent study by PricewaterhouseCoopers, employers can expect to see an acceleration in health-care cost increases in 2012, with expenses rising 8.5% next year.  Their 30-page study says that the recession put a lid on health-care costs, which should keep the inflation rate to 8.5% for 2011, but those price hikes are getting steeper as the recovery gains momentum.

    This medical inflation rate is considered to be fairly moderate.

    “These increases aren’t as great as some years,” said Mike Thompson, a principal at Pricewaterhouse. He noted that over the last decade, there have been several instances where medical inflation has exceeded the double-digit mark.

    “We do see fluctuation from year to year,“ he said.

    Pricewaterhouse surveyed 1,700 employers from 30 industries along with hospital executives and health-plan actuaries. It found that three main factors will drive up medical costs next year.

    First, consolidation among hospitals and physicians is snowballing. While that should increase efficiency, payers worry about the impact of consolidation on rates. Second, inpatient costs for Medicare recipients will rise 3.3 percentage points more than hospital rates. And post-recession stress has taken a toll on worker health.

    But the study says that employers are expected to try to keep a lid on costs between now and next year, and the actual medical inflation rate for employers should be closer to 7%.

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