ECONOMIC NEWS; U.S. Health Costs to Increase in 2011

The percentage of U.S. GDP/GNP dedicated to health care is enormous. Many health economists openly state this is unsustainable especially given the stagnant outcomes provided.

U.S. Health Care Costs Projected to Rise in 2011

Health care costs to rise 9% in 20011

Health care cost growth is expected to slow in 2011, though costs are still expected to rise 9 percent, according to PricewaterhouseCoopers Health Research Institute.

The accounting firm surveyed more than 700 employers and interviewed health plan actuaries to determine the expected rate of increase for 2011.

The survey showed health care costs are expected to grow 9 percent in 2011, down from the 9.5 percent growth rate in the 2010 report. At the same time, the majority of health insurance deductibles will be $400 or more for the first time.

Factors that are driving costs are the shifting of Medicare costs on insured patients, implementation of electronic medical records and consolidation among medical providers.

The federal government continues to cut reimbursement rates for Medicare services, forcing health care providers to raise costs for insured patients to make up for the payment gaps.

While electronic medical records are intended to reduce costs, the upfront installation and implementation costs are likely to boost health care costs in the short run.

And consolidation among hospitals and physician groups is boosting their bargaining power, giving them better reimbursement rates from insurers. Such higher reimbursements result in larger premiums.

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