Health insurance costs up 6 percent, survey finds

WASHINGTON (Reuters) - Healthcare costs for people insured through an employer rose 6.3 percent for the year ended June 30, according to a new Thomson Reuters index released on Thursday.

It found spending for hospital care rose especially fast -- 8.2 percent, compared to a 5.5 percent rise for physician services and a 3.4 percent increase in drug costs.

“Overall, we estimate the per capita healthcare spending for those covered by private insurance is increasing at a rate of 6.3 percent annually in the 2nd quarter of 2010,” reads the report.

“It is growing well above the rate of inflation,” said Gary Pickens, chief research officer at the Thomson Reuters Center for Healthcare Analytics.

Thomson Reuters, parent company of Reuters, used data gathered from hospitals, insurers and other clients to gather the information, which it said represents more than 12 million employees and their dependents.

Pickens and colleagues created an index. “These are based on spending estimates that we don’t expose in this report,” Pickens said in a telephone interview.

The index is calibrated to 100 in 2002. Based on this, total health spending by people covered by employer insurance was 53 percent higher at the end of June 2009 than in 2002, and 62 percent higher in June 2010, an additional increase of 6.3 percent.

“Those changes compound and build up quickly,” Pickens said. “That’s why all the talk around the healthcare reform debate had to do with bending the cost curve. It’s very real.”


About 60 percent of Americans under 65 get health insurance through an employer -- about 157 million adults. Health insurers include WellPoint, Aetna Inc, Cigna Corp, Humana Inc, UnitedHealth Group Inc, Health Net Inc, Amerigroup Corp and the Blue Cross Blue Shield network.

Roughly 45 million people 65 and older have coverage through the nation’s Medicare program for the elderly and disabled.

Another 47 million lack insurance, and on Tuesday the U.S. Centers for Disease Control and Prevention estimated that 59 million Americans had no insurance for at least some of the beginning of 2010.

Healthcare reform was the signature policy for President Barack Obama, but polls show many Americans are unhappy with the bill signed into law in March. Republicans who will take control of the House of Representatives in January have promised to do whatever they can to block its implementation.

Pickens said his team is working to break down details but the data covers three main areas -- spending in hospitals, on doctor services and on prescription drugs.

Drug spending was the surprise area. “Some categories (of prescription drugs) are growing very rapidly,” Pickens said -- for instance, biologics such as targeted drugs for cancer.

He believes the wide availability of cheap generics, especially those offered free or for $4 per refill by retail pharmacies, may be keeping prices from growing too fast.

The report notes that per capita spending inflation for prescription drugs increased dramatically until 2002 but the rate of increase has fallen since 2004.

Consultants PricewaterhouseCoopers LLP and Hewitt Associates both predict U.S. employers will pay nearly nine percent more for health care costs for their workers in 2011, with Hewitt projecting that the average healthcare cost per employee will rise to $9,821 in 2011, up from $9,028 in 2010.

Hewitt says employees will pay $2,209, or 22.5 percent of the total premium, up 12.4 percent from 2010.

SOURCE: Thomson Reuters, November 11, 2010.