Health care costs could rise sharply

Unless companies take action, PricewaterhouseCoopers says, all types of plans might jump by more than 10 percent.

Published November 14, 2006

NEW YORK - Health care costs could rise more than 10 percent in 2007 unless companies change their plans, according to a report by professional services firm PricewaterhouseCoopers.

"What the insurers are projecting is double-digit increases if you don't do anything," said Michael Thompson, a principal at PWC.

Employers are already changing employees' benefit packages, shifting more costs to employees or pushing employees to participate in health and wellness programs, according to the report, based on a survey of health insurance carriers, the firm's own research and government data.

For 2007, costs for preferred provider organizations are expected to rise 11.9 percent. Under preferred provider, or PPO, plans, patients are offered a network of providers. Patients who select providers outside the network will pay more for their care.

Costs for health maintenance organizations are expected to rise 11.8 percent. Under HMO plans, coverage is provided if patients stay in the network.

Costs for "consumer-driven plans" (in which patients pay high deductibles, are offered a tax-protected health savings account and take on more of the direct costs of their care) are expected to rise 10.7 percent.

Only 3-million Americans currently have such plans, compared with 240-million in other private plans, according to the report. Actual premium increases could vary depending on changes employers make to their plans, the report said.

American workers have been shielded from the rising cost of health care for decades, with the burden of rising medical costs borne largely by employers and the government, according to the report.

Americans spent 6 percent of their personal budgets on medical costs in 1960, the same percentage of consumer spending as in 2004, it said.

Both the government and employers are now asking consumers to shoulder more responsibility for their own health, and more of the costs of insurance, in an attempt to curb rising spending levels.