A dramatic jump in the cost of Health Care Services

The cost of health care services in the United States is expected to increase by 7.5% in the year-2013 but may lower to 5.5% when changes in the insurance benefits such as co-payments and higher deductibles are taken into account. This rise is about three times the projected rates for economic growth and inflation. These figures are based on the annual industry report released by the professional service firm PricewaterhouseCoopers or PwC on the nation’s medical cost trend. The current U.S annual rate of inflation rate is 2.3 percent.

The health care cost trends are quite important for the government, employers and the consumers as the rate of insurance premiums depends upon the inflationary trends that gets projected in the various health service sectors. Even the government gets stirred up by the cost trends that backfire in the form of large scale increase in the health care programs in the form of Medicare (Social Insurance program for the elderly and the disabled) and Medicaid (Social welfare/protection program) that may in turn have a big impact on the government’s budget deficit.

The PwC’s Health Research Institute observes that the data for the past three years do indicate an extended slow down in the healthcare inflation from the earlier decades when annual costs rose by double digits. It further states that the annual cost increase is less than 8% for four years in a row.

As per the report of the PwC more than half of the 1400 employers surveyed by the firm are opting to increase their employee’s share of health benefit costs and also expanding the health and wellness program for the year – 2013. The health care costs do spike up due to the upward trends observed in the economic growth and also further development in the new medical technologies that include nuclear medicine imagine techniques known as positron emission tomography and robotic surgery.

The report also states that the prospects for higher growth rate are being held back due to the following factors:

  • Insurance industry pressure on the hospital expenses,
  • Price transparency,
  • Increasing use of generic drugs,
  • Consolidation of physician practices and hospitals,
  • Growth in different types of primary care options such as workplace and retail health clinics.

The PwC’s projection of 7.5% growth nearly doubles the 3.9% rise in health care spending as per the federal government’s official figures available for 2010.

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