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Worker jitters may drive up insurance cost

INDIANAPOLIS — Employers who offer health insurance coverage could see a 9 percent cost increase next year, and their workers may face an even bigger hit, according to a report from consulting firm PricewaterhouseCoopers.

Costs will rise in part because workers worried about losing their jobs are using their health care more while they still have it, the firm said in the report, for which it surveyed more than 500 employers and health insurers. Rising unemployment is also driving up medical costs, it said.

Health care reform legislation being hashed out in Congress likely will have little impact on next year's costs, said PWC principal Michael Thompson. But he noted the intense focus on health care may slow price increases.

"Nobody wants to be front-page news when all the lights are shining on your industry," he said.

The report projects the expected cost increase per person for employee benefits plans, and it factors in things such as price increases and utilization.

Businesses confronted with increases will likely pass some of the burden to employees via higher premiums, deductibles or copays, Thompson said.

"If the underlying costs go up by 9 percent, employees' costs actually go up by double digits," he said, noting that will have a "major, major impact" in an era of pay freezes and cuts.

The 9 percent increase predicted for 2010, however, represents a decrease from the 9.2 percent PWC projected for this year, and 9.9 percent predicted for 2008. A growing use of generic drugs has helped tame spending, according to a recent survey.

Actual cost increases for this year and last were not available.

PWC surveyed more than 500 employers and health insurers. One of the factors it found that may increase medical costs next year is the lingering threat of unemployment.

PWC also said health care providers tend to shift costs to private insurance plans to make up for the revenue drop they see from a rise in the uninsured population or from an increase in the percentage of people covered by Medicaid.

Clinton surgery

Secretary of State Hillary Rodham Clinton expects to have surgery soon to repair a broken elbow she suffered in a fall in the State Department garage. P.J. Crowley, the State Department's spokesman, said it likely would be scheduled "in the coming week."

Worker jitters may drive up insurance cost 06/18/09 [Last modified: Thursday, June 18, 2009 11:31pm]

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