Increases in spending on healthcare services are still an unmet challenge. Prices growing in excess of overall inflation and increases in medical service utilization are sustaining pressures on health insurance premiums. In addition, the effects of litigation and provider consolidation continue to play a role in overall healthcare costs, as does the variation from evidence-based practices. For the better part of the 1990s, healthcare costs rose at a slower rate than they had throughout the 1980s. Private
health spending increases per capita were the lowest in several decades during the period 1994-1998.
Industry observers generally attributed this slower growth in healthcare costs to the success managed care health plans had with network-based healthcare. Yet in the late 1990s, per capita healthcare spending costs began to increase again, peaking around 2002, when PwC estimated that premiums were increasing 13.7 percent. The healthcare landscape has once again changed. PwC's latest estimate is that premiums rose by 8.8 percent from 2004 to 2005.
Much has been written about the rising cost of healthcare costs and premiums. Less has been written on the underlying drivers of those rising costs. A recent PwC report takes a fresh look at issues analyzed in a 2002 PwC report commissioned by America's Health Insurance Plans entitled "The factors fueling rising healthcare costs." The purpose of this report is to identify the underlying drivers of rising healthcare costs. This report takes the additional step of breaking down how current premium dollars are being spent. By detailing how premiums are being spent as well as identifying the drivers of premium increases, this report attempts to provide policymakers and other stakeholders with information that can help guide efforts to address rising healthcare costs and improve healthcare affordability.
Papers:
